F/m Investments Seeks SEC Authorization to Tokenize ETF Shares

F/m Investments has filed a formal application with the U.S. Securities and Exchange Commission (SEC) to authorize the tokenization of shares of its ETF invested in short-term U.S. Treasury Bills. This initiative represents a significant step in the convergence between traditional financial markets and blockchain technology, aiming to modernize the way ownership of financial assets is recorded and transferred.

The Concept of ETF Share Tokenization

F/m Investments’ proposal seeks to record ownership of ETF shares on an authorized blockchain, fully maintaining all economic rights and inherent features of traditional shares. According to information from NS3.AI, this model preserves the full functionality of the financial instrument while introducing the efficiency and transparency characteristic of distributed ledger technology. Tokenization does not alter the nature or value of the ETF, but simply changes the mechanism of recording and transferring ownership.

Regulatory Requirements and Legal Framework

The proposal emphasizes the fundamental importance of several pillars to ensure viability: rigorous regulatory oversight, operational transparency, secure custody mechanisms, and periodic independent audits. These requirements aim to ensure full compliance with the Investment Company Act of 1940 and to maintain alignment with internationally recognized financial standards. The SEC must verify that every aspect of the tokenization respects established legal frameworks and protects investors’ interests.

Implications for the Asset Market

The approval of this application could set an important precedent for the integration of ETFs and other traditional investment products with blockchain infrastructure. This development highlights how digital technology is redefining the way financial assets are structured, traded, and custodied, while maintaining the regulatory protections and security demanded by institutional and retail investors.