CTF Written Submission

IoT-Enabled Tokenization of Physical Assets with Verifiable Physical Proof: A Comprehensive Regulatory and Technical Framework

Sept. 21, 2025
  • The proposal applies the Howey Test to IoT-enabled tokens, affirming that most tokenized physical assets—especially those offering fractional ownership and income rights—qualify as securities under U.S. federal law, thereby triggering SEC jurisdiction and compliance obligations.
  • The framework mandates that smart contracts embed securities law requirements, including automated enforcement of Regulation D holding periods, accredited investor verification, and transfer restrictions, ensuring immutable compliance with federal securities regulations.
  • A proposed Self-Regulatory Organization (SRO), under SEC supervision, would certify and oversee oracle operators, requiring them to meet technical, operational, and financial standards, including minimum capitalization, bonding, and compliance with AML/KYC and reporting obligations.

Last Reviewed or Updated: Sept. 22, 2025