Regulation· ★★★· neutral·

Franklin Templeton Meets SEC Crypto Task Force Over 1940 Act Issues Under Innovation Exemption

  • —Franklin Templeton sought clarity on whether relief from Section 22(d) and Rule 22c-1 is needed for tokenized money market fund shares to trade on a tokenized securities venue
  • —The firm asked whether tokenized NMS ETF shares need similar relief to trade against other tokenized NMS stocks, stablecoins or money market funds
  • —Discussions covered whether relief is required so a liquidity pool is not treated as an investment company and LP interests are not treated as securities
  • —In September the SEC issued the Innovation Exemption, granting tokenized securities venues relief from the exchange definition and allowing AMM liquidity pools
Why it matters: The SEC's guidance will determine whether tokenized funds and ETFs from major asset managers can trade on new venues without breaching the 1940 Act.
Source: CoinGape
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