Comments on theSEC Crypto Task Force’s Questions Concerning Tokenized Securities

The document provides comments and recommendations on various aspects of tokenized securities, including:

1. Tokenization and its benefits: a16z explains that tokenization enables dematerialized securities to be mobilized and used in new blockchain-based transactions and applications. It highlights the potential benefits of tokenization, such as increased efficiency, reduced costs, and improved accessibility.
2. Transfer agents and blockchain technology: a16z discusses the role of transfer agents in the tokenization process and how blockchain technology can enhance their functions. The firm recommends that the SEC provide guidance on the use of blockchain technology by transfer agents and clarify the application of existing rules.
3. Tokenized securities and the Investment Company Act: a16z addresses the unique issues raised by the tokenization of redeemable registered investment company securities, such as mutual funds and money market funds. The firm recommends that the SEC provide guidance on the application of Section 22(d) and Rule 22c-1 of the Investment Company Act to secondary market transactions in tokenized mutual fund shares.
4. Tokenized securities and the National Market System (NMS) requirements: a16z argues that Regulation NMS should not be implicated in connection with peer-to-peer transactions in tokenized securities occurring through blockchain networks that are not controlled. The firm recommends that the SEC clarify the requirements and provide relief from any requirements under Regulation NMS.
5. Atomic settlement: a16z discusses the benefits of atomic settlement, which enables instant or simultaneous settlement of transactions on the same blockchain. The firm recommends that the SEC issue guidance on atomic settlement standards, launch a no-action framework for settlement innovations, and address margin and short-selling compatibility.
6. Regulatory framework for tokenized securities: a16z recommends that the SEC establish a regulatory framework for tokenized securities that is consistent with the existing securities law framework. The firm suggests that the SEC provide guidance on the treatment of tokenized securities across corporate forms and clarify the "swap" and "security-based swap" status of tokenized securities.