Franklin Templeton met SEC Crypto Task Force staff on October 9 to discuss trading tokenized money-market-fund shares against tokenized stocks. The agenda also covered liquidity-provider fees and how pools might be classified. The SEC memorandum does not say the Commission reached a decision or granted relief.
Franklin Templeton representatives met with SEC Crypto Task Force staff on October 9 to discuss trading tokenized money-market-fund shares against tokenized NMS stocks, according to the agency's meeting memorandum. The agenda also raised whether liquidity providers could collect service fees without relief from Section 22(d) and Rule 22c-1.
The memorandum does not state that the Commission reached a decision or granted the relief discussed. The discussion puts the focus on the operating rules around tokenized funds, not only putting fund shares on blockchain rails.
Trading pairs raise a venue-status question
Staff and Franklin Templeton also discussed tokenized NMS exchange-traded funds trading against tokenized stocks, permitted payment stablecoins or tokenized money-market funds. The agenda asked whether additional relief might be required because a Tokenized Securities Venue, or TSV, is not a national securities exchange.
However, the SEC record does not indicate which pairing or venue model the agency would ultimately permit.
Liquidity pools create separate classification questions
The agenda also examined liquidity pool mechanics. It contemplated participants depositing specified tokenized assets and receiving liquidity-provider, or LP, interests in return.
That structure produced two questions in the meeting materials: whether the pools could be treated as investment companies, and whether LP interests could be treated as securities.
The meeting follows the Innovation Exemption
The discussion came after the SEC's September 17 temporary Innovation Exemption. The agency said the exemption permits certain permissioned venues to use automated-market-maker liquidity pools for trading tokenized NMS stocks and provides conditional relief to certain liquidity providers.
The October agenda suggests the initial framework did not answer every practical question once tokenized funds, ETFs and stablecoins join the venue design. An independent report by TokenPost similarly characterized the meeting as covering liquidity-provider fees and possible Investment Company Act exemptions for liquidity pools.
Sources: Crypto Daily, SEC
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