SEC signals cautious progress in tokenisation of ETFs and money market funds

The SEC is gradually embracing tokenised securities, with recent filings and orders indicating a pragmatic shift towards integrating digital assets within existing regulatory frameworks, without overhauling current laws.

The Securities and Exchange Commission is signalling a steady shift toward accommodating tokenisation within the regulatory framework that governs registered investment companies, driven by high-level commentary from commissioners and concrete exemptive filings and orders from market participants. According to The Block, Commissioner Mark Uyeda has described tokenisation as a force capable of changing how securities are issued, traded and managed, and he urged regulators to reassess legacy processes for liquidity, collateral and clearing to reflect on‑chain representations of rights and obligations. Industry observers note that the SEC is pairing that rhetoric with active prioritisation of fund structure innovations, including expedited review of share‑class conversion requests. [2],[5]

That rhetorical shift has been matched by issuer action. F/m Investments filed what is believed to be the first ETF issuer application to seek authority to record ETF shares on a permissioned blockchain, proposing tokenised representations of its US Treasury 3‑Month Bill ETF while preserving the existing CUSIP, economic entitlements and investor protections. F/m’s petition, reported by TMCNet and highlighted in filings tracked by ETF industry commentators, follows the firm’s January exemptive relief that allowed it to add a mutual fund share class alongside its ETF offering. [6],[5]

F/m’s blueprint is notable for its effort to bridge traditional and digital infrastructure: tokenised ETF shares would carry identical governance, fee and voting characteristics as conventional shares and be designed to operate within the Rule 6c‑11 ETF framework under the Investment Company Act. The proposal emphasises compatibility with legacy brokerage plumbing as well as with “token‑aware” platforms, seeking to allow both ecosystem types to interact with the same fund share class rather than forcing parallel on‑chain and off‑chain accounting. [6],[3]

Separately, WisdomTree secured narrow but consequential exemptive relief that permits continuous intraday trading and near‑instant settlement for a tokenised money market fund share class, a development the firm announced after the SEC and FINRA approvals. WisdomTree’s order addresses valuation mechanisms to maintain a stable $1.00 net asset value and grants affiliated transaction relief enabling the fund’s broker‑dealer to act as principal, while the operational description relies on stablecoin rails and a portal model to demonstrate investor experience parity with traditional channels. The relief does not itself authorise token issuance or fiat‑stablecoin settlement as a legal change to transfer agency rules, but regulators accepted the operational context as compatible with the requested exemptions. [3],[4]

Those moves occur against an established SEC backdrop that tokenised instruments remain subject to existing securities laws. The agency’s joint staff statements and earlier commissioner remarks, including a July 2025 declaration that tokenised securities do not escape statutory requirements, reinforce that innovation will be assessed against longstanding investor‑protection principles rather than as a route to regulatory avoidance. Commissioner Uyeda’s engagement and the growing docket of exemptive petitions indicate a pragmatic, outcomes‑focused approach: regulators are testing practical models while keeping the substantive rulebook intact. [7],[2]

Taken together, the speeches, filings and orders show the SEC engaging with tokenisation through incremental approvals and supervised experimentation rather than broad rule rewrites. Market participants from fund boards to advisers and broker‑dealers should expect further narrowly tailored relief and staff engagement as issuers propose how on‑chain mechanics can coexist with the protections embedded in the Investment Company Act and related rules. The immediate implication is not wholesale replacement of legacy systems but a calibrated pathway for tokenised products to operate within the existing federal securities laws, subject to the same scrutiny and conditions that govern traditional fund structures. [2],[3],[5]

Source Reference Map Inspired by headline at: [1]

Sources by paragraph: - Paragraph 1: [2], [5] - Paragraph 2: [6], [5] - Paragraph 3: [6], [3] - Paragraph 4: [3], [4] - Paragraph 5: [7], [2] - Paragraph 6: [2], [3], [5]

Source: Noah Wire Services