F/m Investments seeks SEC approval to tokenize Treasury bill ETF shares

Jan 21 (Reuters) - F/m Investments said on Wednesday that the asset manager has filed with a regulator for approval to record ​ownership of tokenized shares in its U.S. Treasury 3-month bill (TBIL) ETF ‌on a permissioned blockchain.

The filing with the U.S. Securities and Exchange Commission comes amid growing ‌efforts by asset managers and exchanges to bring tokenization into traditional markets, even as U.S. regulators assess how blockchain-based settlement and record-keeping can operate under long-standing securities laws.

The industry says tokenized shares — blockchain-based instruments that track traditional equities — ⁠could revolutionize stock markets ‌by allowing 24/7 trading and instant settlement, boosting liquidity and reducing transaction costs.

"Tokenization is coming to securities markets whether ‍we file this application or not," said Alexander Morris, CEO of F/m Investments.

"The question is whether it happens inside the regulatory framework investors have relied on for 85 ​years, or without that set of protections for investors."

Coinbase, the largest ‌U.S. crypto exchange, has previously sought permission from the SEC to offer "tokenized equities" to its customers while Nasdaq is working with U.S. regulators to introduce trading of tokenized securities.

However, F/m is seeking approval to apply the structure to a registered ETF, with tokenized shares carrying the same CUSIP — the ⁠security's unique identifier — along with identical investor ​rights, fees and voting privileges.

If the SEC approves ​the request, the structure would allow TBIL to operate across both traditional brokerage systems and digital-native, token-aware platforms using a ‍single share class, ⁠without any changes to the ETF's investment objective, portfolio, index or exchange-traded mechanics.

"Unlike stablecoins or unregistered digital tokens — which generally cannot guarantee backing ⁠by traditional assets — F/m's approach keeps tokenized shares firmly within the Investment Company Act ‌of 1940," the company said in a statement.

(Reporting by Pritam Biswas ‌in Bengaluru; Editing by Alan Barona)