- SEC’s Uyeda emphasizes tokenization’s role in modernizing securities regulations.
- Commissioner highlights SEC’s commitment to technology-neutral rules for blockchain assets.
- SEC approves tokenized money market fund, signaling regulatory modernization.
U.S. Securities and Exchange Commission (SEC) Commissioner Mark T. Uyeda recently addressed the growing significance of tokenization in the financial market. During his speech at the Asset Management Derivatives Forum, he emphasized that tokenization of traditional securities is no longer a theoretical concept but an emerging reality, with market participants actively exploring how securities can be issued, held, and transferred using blockchain technology.
Uyeda’s remarks signal a shift in the SEC’s approach to the burgeoning blockchain sector. The Commissioner stressed that while tokenization may seem like a disruptive innovation, it is ultimately about modernizing existing financial structures. He clarified that blockchain-based securities must still adhere to established securities regulations.
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This includes obligations related to investor protection, disclosure, and custody, despite the technological advancements that blockchain brings. According to Uyeda, the SEC must focus on translating existing regulations for blockchain environments, rather than creating a new set of rules for crypto-native assets.
He also discussed how market demand and investor confidence should guide the development of tokenization. The SEC, he noted, should avoid imposing excessive regulatory hurdles that could stifle innovation. He added that tokenization holds the potential to streamline the issuance and distribution of securities, allowing for more direct issuer-investor interactions through “open, programmable rails” of blockchain technology.
SEC’s Efforts to Facilitate Tokenization
The SEC’s commitment to fostering a modern financial environment is further exemplified by its recent actions. Uyeda highlighted the agency’s approval of an exemptive application under the Investment Company Act, submitted by WisdomTree Digital Trust. The application requests permission for affiliated dealers to trade shares of a tokenized money market fund, signaling the SEC’s openness to adopting tokenized models within the traditional financial system.
By approving such applications, the SEC demonstrates that it is willing to embrace technological advancements, provided they align with the objectives of existing securities laws. Uyeda concluded by reaffirming the SEC’s stance on “technology-neutral” rulemaking, aiming to achieve desired outcomes rather than focusing on specific processes.
As the SEC continues to clarify its approach to tokenization, the agency seeks to strike a balance between encouraging innovation and upholding investor protection standards. Tokenization may reshape how securities are managed and traded, but it will remain firmly within the framework of existing regulations, ensuring both progress and security in the evolving market.
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