An industry trade group is urging the US securities regulator to reject a wave of relief requests from crypto companies seeking to offer tokenized stocks.
The Securities Industry and Financial Markets Association (SIFMA), which consists of securities issuers and finance firms, said in a letter on Monday that it has a “significant concern” about reports of crypto firms submitting no-action or exemptive relief to allow them to offer tokenized equities or securities.
No-action relief would mean the SEC wouldn’t recommend taking enforcement action against a firm over products it launches. Exemptive relief allows the SEC to exclude some products from securities laws to test them.
In the letter to the Securities and Exchange Commission’s Crypto Task Force, SIFMA claimed that if such reliefs were granted, then crypto firms could offer securities to the public “outside of the regulatory structure established by the federal securities laws and from which many critical investor protections flow.”
“The SEC should reject such requests to make significant changes to the regulatory structure for the securities markets under the federal securities laws through immediate no-action or exemptive relief in lieu of a more substantive notice and comment process,” SIFMA said.
“These policy questions are simply too important to be addressed purely through immediate no-action or exemptive requests, and such requests should be rejected.”
SEC considering tokenized securities rule change
SIFMA’s letter comes after SEC Commissioner and Crypto Task Force leader Hester Peirce said in May that the regulator is “considering a potential exemptive order” for firms using blockchain to “issue, trade, and settle securities.”
She said companies looking to create platforms for tokenized securities may have to register with the SEC, which many could consider too expensive and could mean companies don’t issue tokenized securities due to the limited platforms they could trade on.
“Exemptive relief could help resolve this chicken-and-egg problem,” Peirce said.
She added that firms should “not have to comply with inapt regulations, which, in many cases, were developed well before the technologies being tested existed.”
TradFi won’t “share power lightly”
Alexander Grieve, the vice president of government affairs at venture firm Paradigm, wrote to X on Wednesday that SIFMA members “want to protect their market position,” as tokenized securities could see…
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