The long-theorized convergence of legacy financial markets and blockchain technology is inching closer to reality as a major investment firm formally requests permission to issue a new class of digitally native securities. F/m Investments, a firm managing over $18 billion in assets, has submitted a landmark exemptive application to the U.S. Securities and Exchange Commission (SEC). The filing proposes a novel approach: recording ownership of its popular US Treasury 3 Month Bill ETF (TBIL) on a permissioned blockchain, a move that could establish the first-ever regulated, tokenized ETF shares in the United States.
This initiative is not merely a technological experiment but a strategic effort to define the future of digital asset regulation. By working within the existing legal framework, F/m aims to create a compliant “on-ramp” for institutional investors to engage with tokenized assets. The success of this application could set a critical precedent, influencing how trillions of dollars in traditional securities are managed, traded, and settled in the years to come. It represents a pivotal test of whether the efficiency of blockchain can be harnessed without sacrificing the investor protections that have been the bedrock of U.S. financial markets for nearly a century.
A Regulated Bridge Between Wall Street and Blockchain
The financial industry’s interest in tokenization stems from the promise of enhanced efficiency, transparency, and accessibility. By representing traditional assets like stocks or bonds as digital tokens on a blockchain, firms can potentially streamline complex back-office processes, reduce settlement times, and enable fractional ownership on a broader scale. This pursuit of modernization has led major financial institutions and exchanges to increasingly explore distributed ledger technology as a viable alternative to legacy infrastructure.
However, this push has been met with significant regulatory hurdles. The core challenge lies in reconciling the decentralized, often pseudonymous nature of public blockchains with the stringent compliance and oversight required in securities markets. F/m’s proposal directly addresses this friction by choosing a path of integration rather than disruption. The firm’s strategy is to bring blockchain technology under the established regulatory umbrella, ensuring it complements, rather than circumvents, existing legal structures.
A Groundbreaking Model for Tokenized Securities
F/m’s application is meticulously designed to maintain the integrity of the existing ETF structure while introducing a new record-keeping layer. The core request is not to launch a new, unregulated digital asset, but rather to gain permission for an alternative method of tracking ownership for its existing TBIL ETF. If approved, the tokenized shares would be a direct digital representation of the traditional shares, operating under the same CUSIP and granting identical rights, fees, and economic terms to their holders.
This model stands in stark contrast to many existing digital assets, which often operate in a regulatory gray area. F/m’s tokenized shares would function as a secondary record of ownership, with the official shareholder list maintained by the fund’s transfer agent. This ensures that the digital ledger provides an additional layer of transparency and functionality without replacing the core, regulated systems that protect investors. The approach is designed to be additive, offering new capabilities without dismantling the established order.
A Vision Rooted in Compliance and Investor Protection
Central to F/m’s argument is an unwavering commitment to the Investment Company Act of 1940, the foundational law governing mutual funds and ETFs. Alexander Morris, CEO of F/m Investments, has emphasized that the goal is to ensure the inevitable transition toward tokenization happens with investor protections at the forefront. The proposal guarantees that the tokenized TBIL shares will remain subject to the Act’s comprehensive requirements, including independent board oversight, daily asset valuation, and third-party custody and audits. By embedding the tokenized shares within this robust legal framework, F/m seeks to offer a product that provides the technological benefits of blockchain alongside the security of traditional finance. This approach explicitly avoids the pitfalls of unregistered securities or unbacked stablecoins by ensuring every tokenized share is a fully collateralized claim on the assets held by the TBIL fund. This compliance-first mindset is intended to build trust with both regulators and risk-averse institutional investors.
Practical Implications for the Securities Market
The approval of F/m’s application would effectively create a dual-system for a single security, a significant innovation in market structure. The TBIL ETF would continue to trade on traditional exchanges and settle through conventional brokerage rails, just as it does today. Simultaneously, its shares could be represented on a permissioned blockchain, allowing for settlement on digital-native platforms. This hybrid model would grant institutions a regulated and seamless pathway to move between different settlement workflows depending on their needs. This “on-ramp” strategy is designed to facilitate gradual institutional adoption of blockchain technology. By allowing market participants to interact with a familiar, highly regulated product in a new digital format, F/m is lowering the barrier to entry. Institutions can explore the benefits of token-based settlement without taking on the counterparty or regulatory risks associated with less established digital assets. This pragmatic approach could serve as a blueprint for other asset managers looking to bridge the gap between traditional and decentralized finance.
A Bellwether for Broader Industry Transformation
The outcome of F/m’s filing is being closely watched across the financial industry, as it could act as a bellwether for the future of securities tokenization in the United States. A favorable decision from the SEC would signal a clear regulatory path forward, potentially unlocking a wave of similar applications from other ETF issuers and asset managers. It could accelerate the development of blockchain-based market infrastructure and foster greater innovation in how securities are issued, traded, and custodied.
Ultimately, this proposal represents more than just a new feature for a single ETF. It is a calculated move to shape the regulatory landscape and guide the evolution of financial markets. By proposing a model that marries the innovation of blockchain with the proven stability of existing securities laws, F/m Investments has initiated a critical dialogue with regulators. The decision reached would have profound and lasting implications for the integration of digital asset technology into the mainstream financial system.