SEC develops framework for tokenised securities under new principle

The US securities regulator SEC is developing a framework for listing and trading tokenised securities. This is being done under the guiding principle of ‘Innovation Without Arbitrage’, SEC Trading and Markets Director Jamie Selway has announced. At the same time, the SEC is working with the CFTC to better align regulations.

Innovation Without Regulatory Arbitrage

Selway said that SEC Chair Atkins has tasked the division with building a framework within which tokenised securities can be traded in a regulated manner. The starting point is that innovation should not lead to unequal treatment of similar products, i.e. no regulatory arbitrage.

In addition to the tokenisation dossier, the SEC is also working on harmonising policy with the CFTC. Both regulators are jointly looking at ways to align their rules so that market participants cannot benefit from inconsistencies between the two bodies. This also applies to the approach to new product types, such as perpetual futures. The regulators want to prevent retail investors from being exposed to excessive leverage.

Perpetual futures and cooperation with CFTC

The SEC and CFTC are also currently jointly evaluating new derivatives products. Perpetual futures are specifically on the agenda. This type of product is already hugely popular in the crypto world: Hyperliquid now handles a record share of global perpetual futures, demonstrating how fast this market is growing.

The joint approach of both regulators appears aimed at creating a consistent and clear regulatory framework so that new financial products can become available responsibly to both institutional and retail investors. Selway sees the cooperation with the CFTC as an opportunity to increase efficiency and flexibility and lower the barrier to innovation.