The Securities Industry and Financial Markets Association (SIFMA) has strongly advised the US Securities and Exchange Commission (SEC) to deny requests from cryptocurrency firms for the provision of tokenised equities via no-action or exemptive relief. This plea comes in response to reports indicating that these firms are seeking to bypass public consultation on such offerings.
No-action relief facilitates a path where the SEC will not pursue enforcement actions against firms introducing certain products or services. However, SIFMA has expressed concerns that this process undermines essential policy discussions, lacking the transparency and public input necessary for sound regulatory decision-making. The organisation advocates for a more comprehensive public consultation process before any decisions are made.
Furthermore, SIFMA’s correspondence highlights lingering issues surrounding investor protection, oversight of unregistered entities, and the status of Financial Industry Regulatory Authority (FINRA) membership. They have called for a rigorous regulatory examination that incorporates input from both the public and industry stakeholders.
A SIFMA representative stated, “These policy questions are simply too important to be addressed purely through immediate no-action or exemptive requests, and such requests should be rejected.”
Currently, cryptocurrency platforms such as Coinbase and Kraken are pursuing the blockchain-based trading of tokenised stocks, which would position them to compete directly with traditional brokerage firms.
In parallel, the SEC is advancing discussions regarding multiple cryptocurrency Exchange-Traded Fund (ETF) proposals, including those linked to assets like SOL, XRP, and DOGE. There are indications that the SEC is developing a new ‘generic listing framework’ designed to facilitate speedier approvals by moving away from the conventional 19b-4 exchange-led approach.
An issuer, 21Shares, reflected on this potential new framework, suggesting it could considerably simplify the listing process by eradicating much of the confusion associated with the existing approval method. Bloomberg analyst James Seyffart mentioned that this new framework might be finalised before October.
In summary, while the SEC navigates through these critical regulatory discussions, SIFMA remains staunch in its advocacy for investor protections and proper governance in the rapidly evolving realm of cryptocurrency and tokenised assets.
