CFTC, SEC Advance Tokenization After CLARITY Act Setback

US Commodity Futures Trading Commission (CFTC) Chair Michael Selig said financial markets should prepare for “mass tokenization” as regulators adapt existing frameworks for blockchain, artificial intelligence and onchain markets.

In remarks delivered Tuesday at the US Treasury Market Conference, Selig said tokenization of real-world assets (RWAs) could become the foundation of a more efficient financial system, enabling near-instant settlement and real-time collateral movement between clearinghouses, intermediaries and users.  

“Just as the transition from hand signals to electronic trading advanced our financial system, I believe tokenization can do the same for all asset classes,” Selig said, adding that the CFTC would pursue principles-based rules as tokenization and onchain finance evolve.

Selig said in August that the CFTC would move ahead with crypto rules under its existing authority if Congress did not pass the CLARITY Act. The Senate failed to advance the bill on Sept. 15.

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On Sept. 17, the CFTC submitted a regulatory action covering crypto asset transactions and markets for White House review. The filing is still at the “prerule” stage and does not detail the planned regulations.

SEC also moves to bring markets onchain

Officials at the US Securities and Exchange Commission (SEC) have also promoted the development of tokenized markets.

In a Bloomberg TV interview, the SEC’s Division of Trading and Markets Director Jamie Selway said that tokenization and crypto have recently become politicized but are “not naturally a politicized function.”

Selway said US success in developing the markets should receive bipartisan support.

On Sept. 17, the SEC granted a temporary “Innovation Exemption” for tokenized US stock trading. 

The exemption lets certain platforms trade digital versions of US-listed stocks under certain conditions.

SEC Chair Paul Atkins said in February that such an exemption could facilitate onchain trading while regulators developed longer-term rules.

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