10-18-2020 icon

SEC Considers Tokenising Exchange-Traded Funds

By calvin

The SEC has given further consideration to tokenizing Exchange-Traded Funds. SEC Chairman, Jay Clayton revealed details of the commission’s approach to regulating cryptocurrency products during a panel discussion hosted by the Chamber of Digital Commerce.

SEC Progress With the Tokenisation of Exchange-Traded Funds

The SEC has been working on regulations that could eventually permit crypto versions of ETFs. It is collaborating with U.S. regulators, such as the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC) to determine which of the crypto products regulators will have jurisdiction over.

According to Clayton, the utility of the token is what determines which regulator should take the lead. He suggests that the tokenisation of ETFs should be under the purview of the SEC, emphasising that the SEC should be and is willing to regulate them. 

“Our door is wide open, if you want to show how to tokenize the ETF product in a way that adds efficiency, we want to meet with you, we want to facilitate that. Of course, you got to register it and do what you would do with any other ETF.”

“One of the problems that we had was we got off on the wrong foot in this innovation … I think now, three years later, four years later, we are in a much better spot.”

Following the Regulatory Frameworks

Clayton stressed the importance of staying true to principles even if all trading activities become tokenized. Stock issuers and insiders all have responsibilities to operate in accordance with the regulatory frameworks set in place. 

Regulators around the world have been zoning in on the cryptocurrency sector. In Nigeria, the Securities and Exchange Commission (SEC) finally inaugurated the Fintech Roadmap Implementation Committee. The committee will have a say in how cryptocurrencies are classified.

Photo by Quintin Gellar from Pexels