The SEC Crypto Task Force will shortly host its next big roundtable, “Tokenization — Moving Assets Onchain: Where TradFi and DeFi Meet”

The May 12 crypto roundtable will include two main panel discussions that might well shed some useful light on the SEC's policy on asset tokenization.

The Securities and Exchange Commission (SEC) is preparing for its next big crypto event. On May 12, the SEC’s Crypto Task Force will host a roundtable titled “Tokenization — Moving Assets Onchain: Where TradFi and DeFi Meet”.

The event will feature top-level executives from large financial institutions and crypto players to discuss the regulation of tokenizing traditional assets.

The May 12 crypto roundtable will include two main panel discussions that might well shed some useful light on the SEC’s policy on asset tokenization. One of them is “Evolution of Finance: Capital Markets 2.0.” The panel will probably cover how traditional capital markets are evolving to include blockchain technology and what regulatory issues an evolution of that kind raises.

With Robert Mitchnick of BlackRock and Cynthia Lo Bessette of Fidelity on the panel, participants will learn from firms that have been successful in rolling out digital asset products. These executives lead firms overseeing trillions of assets that have just dipped their toes into cryptocurrency products.

Nasdaq’s participation through Eun Ah Choi suggests the discussion may also include how conventional market infrastructure providers view tokenized securities trading. This may include an inquiry into potential changes to existing exchange frameworks and settlement infrastructures.

According to the SEC meeting brief, the second panel, “The Future of Tokenization,” will feature participants from companies like Robinhood, Chia Network, and Securitize. They will potentially focus on longer-term technological and regulatory developments. The SEC is particularly interested in hearing ideas about appropriate regulatory approaches to tokenization because of Commissioner Peirce’s comments.

Key themes likely to dominate the crypto discussion

Some of the top themes that will arise in the SEC’s tokenization roundtable are dependent on the list of panelists and the current regulatory landscape. Interoperability and standards of asset tokenization can be a major subject of discussion, and the DTCC and major bank panelists will address how current securities infrastructure can be extended to accommodate tokenized assets.

The distinction between security tokens and utility tokens may receive attention, especially with Commissioner Peirce leading the Crypto Task Force. Her previous “safe harbor” proposal for token projects suggests the SEC might be looking into more nuanced approaches to token classification beyond the current application of the Howey test.

The SEC crypto team could also address tokenized asset custody offerings. This is because Fidelity and BlackRock may be negotiating institutional-grade custody requirements. This subject is especially relevant in the wake of the SEC’s enforcement actions on crypto custody activities.

Market structure issues, such as trading venues and settlement systems for tokenized securities, will likely be at the forefront with Nasdaq’s involvement. Issues around where tokenized assets fit into the current market infrastructure versus possibly new ones might also arise.

Apollo Management and Invesco will address compliance challenges for traditional financial institutions entering the tokenization space. BlackRock’s presence at the roundtable comes at a time when there has been competition between Strategy and BlackRock to purchase Bitcoin. According to the most recent information, Strategy spent $180 million to purchase 1,895 Bitcoin.