The US Securities and Exchange Commission (SEC) chairman Jay Clayton recently said that the agency is ready to facilitate tokenized exchange-traded funds (ETFs). The agency is currently working with other regulators in the US to determine crypto product regulations.
SEC changes stance
The SEC has been historically hawkish on digital currency ETFs and rejected several applications as well. However, in a recent panel discussion hosted by the Chamber of Digital Commerce titled, “Two Sides of the American Coin: Innovation & Regulation of Digital Assets,” he talked about the regulation of cryptocurrencies. The event also hosted Brian Brooks, the acting Comptroller of the Currency.
According to the Financial Times, Clayton noted that the SEC is actively working on regulations that could eventually lead to crypto-related ETF products. The agency is currently working with the Office of the Comptroller of the Currency (OCC) and the US Commodity Futures Trading Commission (CFTC) to understand which regulator will have jurisdiction over different types of crypto products.
What will decide jurisdiction?
Clayton said that the utility of the token will be the primary factor determining which regulator gets to regulate a crypto product. Banking regulators will get to supervise tokens designed for making payments. Tokenized ETFs will come under the jurisdiction of the SEC and the agency is interested in regulating 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.”
Jonathan Steinberg, the CEO of Wisdomtree Investments appeared during the same event in a different panel and said that tokenized investments provide an opportunity for something better than an ETF product. Last year, Franklin Templeton Investments filed paperwork with the SEC to offer a government money market fund that includes both traditional and tokenized investments.