In a pioneering move that could redefine the intersection of traditional finance and blockchain technology, U.S. ETF manager F/m Investments has formally requested regulatory approval from the U.S. Securities and Exchange Commission (SEC) to tokenize the shares of its U.S. Treasury 3-Month Bill ETF (TBIL). This submission, made in early 2025, is the first formal application seeking relief for the tokenization of a registered investment company's exchange-traded fund shares.
The proposal outlines a plan to record share ownership of the TBIL ETF on a permissioned blockchain ledger. This would shift the mechanics of share transfer and settlement from traditional clearinghouses to on-chain processes. F/m Investments emphasizes that this technological shift does not alter the fundamental nature of the security. Each tokenized share would maintain identical characteristics to its traditional counterpart, including the same CUSIP identifier, voting power, and economic entitlements, while operating fully within the framework of the Investment Company Act of 1940. Oversight mechanisms such as board governance, daily portfolio transparency, and independent third-party custody and auditing would be preserved.
The initiative aims to enhance efficiency and accessibility. A key contrast between traditional and proposed tokenized ETF mechanics is the settlement time: moving from T+2 (trade date plus two days) to the potential for near-instant (T+0 or T+1) settlement. Furthermore, the technology could eventually enable fractional share ownership, making precise treasury bill exposure more accessible to investors.
This request arrives amid a significant global trend toward the tokenization of real-world assets (RWA), with major institutions like BlackRock and JPMorgan exploring blockchain-based systems. However, applying this technology to a publicly traded, SEC-registered ETF within the U.S. regulatory perimeter marks a new frontier. It follows the SEC's approval of spot Bitcoin ETFs in January 2024 but tests a different angle: using blockchain as a superior infrastructure for traditional securities, not merely as the basis for a novel asset.
Legal experts note the strategic framing of the request. "F/m is not asking to create a new product," explained a former SEC attorney. "They are asking for relief to use a new technological method for recording ownership of an existing, fully compliant product. This distinction is crucial. It frames blockchain as a utility, not the source of the asset's value." The firm's CEO, Alexander Morris, stated that the tokenization of traditional financial instruments is inevitable.
The SEC's response will set a critical precedent. Approval could spur other ETF issuers to follow suit for equity, fixed-income, or commodity-based funds, accelerating an industry-wide technological upgrade and establishing a regulated blueprint for merging traditional finance with blockchain. A rejection or significant modification would clarify the SEC's current limits on integrating distributed ledger technology into core securities markets. The decision will serve as a key indicator of whether U.S. financial regulation views blockchain as a speculative threat or a viable operational improvement.
