CFTC and SEC advance tokenization after CLARITY Act setback

CFTC Chair Michael Selig said financial markets should prepare for mass tokenization. He said tokenization of real-world assets could support a more efficient financial system. He said it could enable near-instant settlement and real-time collateral movement between clearinghouses, intermediaries and users. Selig said the CFTC would pursue principles-based rules as tokenization and onchain finance evolve. He 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. The CFTC submitted a regulatory action covering crypto asset transactions and markets for White House review on Sept. 17. The filing remains at the prerule stage and does not detail the planned regulations. SEC officials have also promoted tokenized markets. SEC Division of Trading and Markets Director Jamie Selway said tokenization and crypto have recently become politicized. Selway said those activities are not naturally political functions. Selway said US success in developing the markets should receive bipartisan support. The SEC granted a temporary Innovation Exemption for tokenized US stock trading on Sept. 17. The exemption lets certain platforms trade digital versions of US-listed stocks under certain conditions. SEC Chair Paul Atkins said in February that the exemption could facilitate onchain trading while regulators developed longer-term rules.