Lede
F/m Investments has officially submitted a request to the United States Securities and Exchange Commission (SEC) seeking permission to tokenize the shares of its flagship Treasury exchange-traded fund. This strategic move is focused on the F/m US Treasury 3 Month Bill ETF, which is commonly identified by its ticker symbol, TBIL. At present, this specific exchange-traded fund manages approximately $6 billion in shares, making it a significant candidate for blockchain integration within the regulated financial space. F/m has characterized this filing as a “first of its kind” endeavor, noting that it represents a rare instance of an ETF issuer requesting specific US regulatory relief for the purpose of offering tokenized shares of a registered investment company.
The proposal involves recording the ownership of these shares on a permissioned blockchain, all while ensuring the fund remains a standard 1940 Act exchange-traded fund. By seeking this exemptive relief, F/m Investments aims to modernize the way share ownership is recorded and managed. This initiative marks a transition from experimental blockchain pilots toward the practical application of distributed ledger technology within multi-billion dollar investment vehicles. If granted, the move would allow the fund to maintain its traditional regulatory status while utilizing digital recording methods to manage its significant asset base.
Context
The proposed tokenization of TBIL shares is designed to be a seamless extension of the fund’s current operations rather than the creation of a new, separate asset class. Under the plan submitted by F/m Investments, the onchain representation of the shares would utilize the exact same Committee on Uniform Securities Identification Procedures (CUSIP) number that is currently assigned to traditional shares. Furthermore, the firm has stated that these tokenized shares would carry the identical rights, fees, voting power, and economic terms as the TBIL shares held by investors today. This approach suggests that tokenization is being viewed as an alternative method for recording ownership rather than a fundamental change to the underlying investment product.
This move aligns with a broader trend in the financial sector where established asset managers are exploring the utility of blockchain-based solutions. Some key developments in this area include:
- Franklin Templeton has already launched blockchain-enabled US government money market funds and conducted various tokenization pilots.
- State Street has recently introduced new tools specifically designed for crypto tokenization.
However, F/m’s approach is notably different from these precedents. While earlier efforts by other firms often focused on money market mutual funds, F/m is looking to layer tokenization onto a listed Treasury ETF. This distinction is significant as it could potentially broaden the available universe of regulated fixed-income products that are enabled for tokenized environments.
Impact
A primary focus of the F/m proposal is the maintenance of rigorous regulatory standards and investor protections. The firm has emphasized that TBIL’s tokenized shares would remain subject to the comprehensive protections afforded by 1940 Act funds. This regulatory framework includes independent board oversight, daily portfolio transparency, and requirements for third-party custody and audits. By adhering to these established standards, F/m aims to contrast its model with stablecoins or other unregistered digital tokens that may lack similar institutional oversight and transparency.
The potential impact of this filing is further highlighted by shifting infrastructure in the wider financial markets. For instance, the New York Stock Exchange has recently unveiled plans for a new venue designed to facilitate 24/7 trading and onchain settlement for tokenized stocks and exchange-traded funds. Such infrastructure could provide a robust environment for tokenized products like TBIL to operate with greater efficiency. If the SEC approves the filing, it would represent a pivotal moment where tokenization shifts from isolated pilots into the mainstream of registered investment companies, providing a bridge between traditional brokerage rails and the emerging digital asset landscape.
Outlook
Should the SEC grant the requested relief, the future of the TBIL ETF would involve a dual-rail system for share distribution and record-keeping. F/m Investments indicates that the fund would be capable of supporting both traditional brokerage rails and digital-native, “token-aware” platforms through a single share class. Importantly, this transition would be achieved without changing the fund’s investment objective or the composition of its underlying portfolio. The ability to use a permissioned blockchain as a record-keeping tool for a $6 billion Treasury ETF could serve as a blueprint for other registered investment companies seeking similar regulatory paths.
As the industry continues to explore the benefits of onchain settlement and 24/7 market access, the successful tokenization of a listed ETF would represent a significant step in the convergence of blockchain technology and fixed-income products. The firm’s application comes at a time when the market is increasingly looking for regulated, transparent ways to interact with digital assets. By maintaining the protections of the Investment Company Act while embracing onchain settlement, F/m is positioning itself at the forefront of the next evolution in the exchange-traded fund industry.
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