SIFMA asks SEC to clear rules for digital assets and tokenization

• SEC discusses digital asset regulation with SIFMA
• Financial group defends clear and updated rules
• SIFMA rejects exemptions for tokenized shares

The Securities Industry and Financial Markets Association (SIFMA), an entity that represents about 90% of the financial market in the United States, met with the SEC's cryptocurrency task force to discuss regulatory guidelines related to digital assets, including digital commodities and tokenized securities.

During the meeting, held on Thursday, SIFMA defended the need for consistent, yet technologically advanced, regulation for digital asset service providers. The group suggested that current disclosure standards be expanded to accommodate new digital security formats.

The association also stressed that functions such as exchange, brokerage, trading and custody should be kept separate in order to promote competition and interoperability among market participants. In addition, it recommended limiting the direct participation of retail investors in trading involving digital securities or commodities.

SIFMA’s proposal aims to establish an open, transparent and technically up-to-date regulatory framework for the issuance and trading of digital assets. “Regulation should take into account transitional and hybrid arrangements,” the entity said, acknowledging the growing interest of traditional financial institutions in integrating cryptocurrencies and digital assets into their services.

The group also advocated that the legislation incorporate guidelines that allow cross-border applicability, adapting the legal texts to the new technological realities involving tokenized assets and hybrid trading models.

Earlier this week, SIFMA also filed a request with the SEC to reject applications from companies seeking to offer tokenized shares based on specific exemptions. The group said such initiatives could compromise market integrity and avoid due process. “SIFMA urges the SEC to reject companies’ requests for no action or exemption and instead provide a robust public process that allows for meaningful public feedback before making any decisions on the introduction of new trading and issuance models,” the association said.

SIFMA represents brokerages, investment banks and asset managers that manage more than $13 trillion in client assets.