Chairman Jay Clayton: The SEC is Open to Tokenizing ETFs Despite Recent Clampdowns


The Chair of the U.S Securities Exchange Commission (SEC), Jay Clayton, has said that the agency is open to discussing tokenized exchange-traded funds (ETFs). He was speaking at a Chamber of Digital Commerce webinar held on Oct 2, where he highlighted that ‘It may very well be the case that […stocks] all become tokenized.’

Despite a struggle to stay in the loop on crypto innovations, the latest sentiments by Clayton signal SEC's openness to its underlying potential. A tokenized ETF will allow American investors to access stock indices in the form of tokens, hence Clayton’s futuristic view of integrating traditional instruments with modern-day tech ‘tokenization.’ Clayton said in a Decrypt report,

“We're willing to try that; our door is wide open. If you want to show how to tokenize the ETF product in a way that adds efficiency, we want to meet with you, we want to facilitate that.”

SEC Actions Paint a Different Picture

While the SEC Chair appears to have taken an open stance towards tokenization, the agency’s recent clampdowns on crypto businesses state otherwise. Some industry players that have faced the SEC wrath this year include Abra, a crypto investment platform that offers clients stocks in tokenized versions. The firm was fined around $300,000, split between CFTC and SEC, given that both agencies were pursuing Abra.

Other than the clampdowns, SEC has rejected several Bitcoin ETFs citing that the BTC price can easily be manipulated. Clayton said,

”We got off on the wrong foot in this innovation. There was the theory that because it was so efficient because it could have had so much promise, we could toss aside some of those principles of responsibility and transparency.”

He was eager to note that the SEC has to stay true to its role by identifying product launch issuers in America’s financial markets. On this, he further mentioned that they are still in pursuit of ICO issuers who might have breached U.S securities regulations during the ICO boom in 2017. It also appears the SEC is entirely against the narrative of ‘payment networks,’ but instead views ETF’s a financing vehicle,

“What we don't like is when someone says, ‘you know, the function is payments … Don't pretend that it's a payment system when it's actually a financing vehicle.”

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