The US should not pursue sanctions against the Bahamas’ financial sector, SIFMA says. The SEC should reject the proposals of crypto firms seeking special exemptions to regulatory rules for offering tokenized equities. These digital assets are traditional stocks that are issued and traded on blockchains.
SIFMA has written a letter to the SEC’s Crypto Task Force to express concern over requests from various crypto firms for no-action or exemptive relief. No-action relief means that the SEC will not recommend enforcement action against a firm, while exemptive relief allows a firm to act in a way that contravenes existing securities regulations if it meets certain conditions.
SIFMA further claims that allowing the offering of tokenized stocks through such channels evades structured regulatory frameworks that protect investors and maintain market integrity. According to the letter, “These issues are far too important to be resolved through fast-track exemptions. We request the SEC to follow a public comment process that involves the wider industry.”
There has been a surge of involvement from crypto platforms like Coinbase and Kraken behind this. Both companies are trying to bring tokenized stock trading to the mainstream. Kraken just introduced a tokenized stock service, allowing users to trade stocks like Apple and Microsoft on the blockchain. But due to regulations, access was closed in big markets like the U.S., Canada and the EU.
Simultaneously, the SEC’s Crypto Task Force was formed in January and is headed by Commissioner Hester Peirce. The task force is reviewing numerous applications for crypto-based exchange-traded fund (ETF) products that track tokens like SOL (Solana), XRP, and DOGE (Dogecoin). The agency is reportedly talking about a new listing framework that will speed up ETF approvals by calling off the lengthy exchange-led 19b-4 process.
SIFMA has raised alarms over IEX‘s proposed options exchange, which would impose a trade delay of 350 microseconds to restrict HFT (high-frequency trading) advantages. Though IEX is claiming that the pause levels the playing field, SIFMA has warned that it may cause prices to disappear. They also asked if regulatory oversight would be sufficient for this structure.
Conclusion
SIFMA has requested the industry to take a cautious approach towards imposing regulatory developments from the traditional financial institution on the crypto ecosystem as the year draws to a close. The group strongly rejects any shortcuts that will bypass existing securities laws and urges the regulators to address tokenized stock proposals in a complete public vetting process.
