SIFMA has asked the SEC to reject requests from crypto companies to offer tokenized equities

The Securities Industry and Financial Markets Association (SIFMA) has asked the SEC to reject requests from crypto companies to offer tokenized equities through specific exemptive relief. The trade association warns that such moves could undermine transparency and regulatory safeguards. 

According to reports, crypto companies want to offer tokenized stocks and have asked the SEC for no-action or exemptive relief to do so. No-action relief means that the SEC staff will not suggest that the company be punished if it sells those products.

Therefore, SIMFA sent a letter to the SEC’s Crypto Task Force this week saying that its members have been reading with great concern these reports. “These policy questions are simply too important to be addressed purely through immediate no-action or exemptive requests, and such requests should be rejected,” SIFMA said.

Instead of going through no-action or exemptive relief to launch those products, SIFMA said the agency should require a more transparent process through public comment and engagement from the broader industry.

SIMFA asks for scrutiny of IEX’s options exchange proposal

This comes after SIFMA voiced concerns about IEX’s plans to open a new options trading site. They asked regulators to carefully check if the plan meets market fairness and transparency standards.

IEX proposed an options exchange that would introduce a 350-microsecond pause on trades. This stops very fast traders from taking advantage of small price differences. SIFMA, representing broker-dealers, investment banks, and asset managers, said the proposed setup could harm investors.

According to the association, brokers must send orders to the exchange that display the best price. However, under IEX’s plan, those displayed prices might disappear before the trade is executed, potentially leaving customers with inferior deals.

“It has been well established by the SEC and Federal Court that IEX innovations … help investors and do not harm them,” the company’s chief market policy officer John Ramsay said

SIFMA said that it is still unclear whether firms need to become members of the Financial Industry Regulatory Authority and how investors would be protected, and whether the SEC would be able to “oversee unregistered entities.” 

The SEC weighs proposals for crypto exchange-traded funds

Several firms and individuals have filed written input to the SEC’s Crypto Task Force over the past several months. The task force was created in January and is led by SEC Republican Commissioner Hester Peirce in the wake of the new Trump administration. 

For instance, some crypto companies, like Coinbase and Kraken, have started offering tokenized stocks. This allows investors to trade traditional stocks on the blockchain. Therefore, they are in direct competition with other, more traditional financial brokerages. The Kraken company has said that it wants to start dealing stocks using tokens. This will be possible in Europe, Latin America, Africa, and Asia.

Meanwhile, the SEC is looking at dozens of plans for crypto exchange-traded funds, such as ones that track SOL, XRP, and DOGE.

Reports say that the SEC is beginning to make a “generic listing standard” for these ETFs. If they do, issuers might not have to go through the usual 19b-4 process led by exchanges, which would speed up the clearance process.

Some crypto companies, like Coinbase and Kraken, want to start offering tokenized stocks. If they get permission from the SEC, they might be able to let people trade traditional stocks on the blockchain.

 This would put them in direct competition with other, more traditional financial brokerages. The Kraken company has said that it wants to start dealing stocks using tokens. This will be possible in Europe, Latin America, Africa, and Asia.

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