A $6.3 Billion Bet: Could This ETF Be The First-Ever Tokenized U.S. Fund?

In a landmark move poised to bridge traditional finance with blockchain infrastructure, asset manager F/m Investments has formally asked the U.S. Securities and Exchange Commission (SEC) for permission to tokenize shares of its $6.3 billion U.S. Treasury 3-Month Bill ETF (TBIL).

The application seeks “exemptive relief” to allow the fund’s existing shares to be recorded on a permissioned blockchain ledger while maintaining the same legal identity, investor rights, and regulatory protections under the Investment Company Act of 1940. This pioneering request positions the ultra-short-term Treasury ETF as a critical test bed for “tokenized finance,” aiming not to alter the fund’s strategy but to rewire its back-end settlement and ownership mechanics. The filing arrives amid accelerating institutional momentum for tokenization, highlighted by parallel initiatives from the New York Stock Exchange and bullish commentary from leaders like BlackRock’s Larry Fink.

F/m’s Bold Proposal: Tokenizing a Treasury ETF Within the Regulatory Frame

The financial world is witnessing a carefully calibrated experiment in modernization, spearheaded by F/m Investments, an ETF issuer with approximately $18 billion in assets under management. At its core, the firm’s application to the SEC is deceptively simple yet profoundly significant: it asks for the ability to represent ownership of shares in its flagship TBIL ETF on a permissioned blockchain. Crucially, this is not a proposal for a new fund or a new asset. TBIL would continue to hold short-term U.S. Treasury bills, trade under the same ticker on Nasdaq, and be governed by the exact same rules that have protected investors for decades.

What would change is the underlying “book of record.” Instead of—or in parallel to—traditional centralized ledger entries, a portion of the fund’s shares would exist as digital tokens on a blockchain. These tokenized ETF shares would carry the exact same CUSIP identifier as their conventional counterparts, ensuring they are legally and economically identical. This “same wrapper, new plumbing” approach is a masterstroke in regulatory strategy. It frames blockchain not as a disruptive outsider but as an incremental efficiency upgrade to existing, approved market structures. Alexander Morris, CEO of F/m, encapsulates the philosophical stakes: “Tokenization is coming to securities markets whether we file this application or not. The question is whether it happens inside the regulatory framework investors have relied on for 85 years, or without that set of protections for investors.” The application is, therefore, a plea for the SEC to guide this technological transition from within the established system.

Demystifying “Tokenized Shares”: What It Means for Investors and Markets

To grasp the potential of F/m’s proposal, one must move beyond the buzzword and understand what tokenization means in this context. A tokenized share is not a newfangled cryptocurrency. It is a digital representation of a traditional security—in this case, an ETF share—where ownership is recorded, transferred, and settled on a blockchain-based ledger. Think of it as taking the digital ownership record that already exists in a broker’s or transfer agent’s database and expressing it in a standardized, programmable, and cryptographically secure format on a shared digital ledger.

The proposed benefits are rooted in the inherent properties of blockchain technology. Settlement, the process of finalizing a trade by exchanging cash for security, could move from the current “T+1” cycle (trade date plus one day) to near-instantaneous completion (“T+0” or real-time). This drastically reduces counterparty risk and frees up capital. Operational efficiency could see manual reconciliation processes between brokers, custodians, and clearinghouses automated via smart contracts, slashing costs and errors. Furthermore, programmability opens doors for innovative features, such as attaching specific compliance rules directly to the token or enabling more complex, automated portfolio management strategies. For the end investor in TBIL, none of this complexity would be visible; they would simply own a share that is cheaper and less risky to administer, with the potential for deeper liquidity and innovative financial products built around it in the future.

The Regulatory Tightrope: Seeking SEC Approval for a Dual-Track System

The most critical hurdle for F/m’s vision is regulatory approval. The firm has specifically requested “exemptive relief” from the SEC, a mechanism that allows regulators to permit deviations from existing rules if they determine it is in the public interest and consistent with investor protection. This acknowledges that current securities laws, written for a pre-digital age, do not explicitly contemplate a single security existing simultaneously on a traditional ledger and a blockchain.

The genius of F/m’s application lies in its commitment to maintaining the full suite of traditional investor protections. The tokenized shares would remain subject to the Investment Company Act of 1940, guaranteeing daily portfolio transparency, strict board oversight, independent custody of assets (likely with a qualified bank or trust company), and regular third-party audits. This stands in stark contrast to many stablecoins or unregistered digital tokens, which often lack such rigorous, legally mandated safeguards. By pledging to keep “tokenized shares firmly within” this established framework, F/m is assuring regulators that it seeks to upgrade the *infrastructure*, not dilute the *protections*. If approved, the model would create a precedent-setting dual-track system where a security can fluidly exist in both the traditional and digital realms under one regulatory umbrella, paving the way for the entire asset management industry to follow.

The TBIL Tokenization Blueprint: A Side-by-Side Comparison

Traditional ETF Structure (Today’s TBIL)

• Ownership Record: Centralized ledger maintained by a transfer agent.
• Settlement Cycle: T+1 (Trade date + 1 business day).
• Trading Hours: Limited to exchange hours (9:30 AM - 4:00 PM ET).
• Regulatory Anchor: Investment Company Act of 1940.
• Investor Protections: Daily disclosures, board oversight, third-party custody/audit.
• Operational Process: Manual reconciliation between brokers, DTCC, and custodians.

Proposed Tokenized Framework (Future TBIL)

• Ownership Record: Permissioned blockchain ledger + traditional ledger.
• Settlement Cycle: Potential for T+0 or near-instant settlement on-chain.
• Trading Potential: Could enable trading on compliant digital platforms beyond traditional hours.
• Regulatory Anchor: Same Investment Company Act of 1940, via SEC exemptive relief.
• Investor Protections: Identical daily disclosures, board oversight, third-party custody/audit.
• Operational Process: Automated settlement and reconciliation via smart contracts, reducing cost/error.

Ripple Effects: How Tokenization Could Reshape Financial Infrastructure

Should the SEC grant approval, the implications would extend far beyond a single $6.3 billion Treasury ETF. It would signal a green light for the systematic “rewiring” of core financial market plumbing that industry leaders have long predicted. The efficiency gains in the U.S. Treasury market—the deepest and most liquid debt market in the world—would be a powerful proof of concept. Tokenizing the ownership and settlement of Treasury-backed instruments could reduce systemic friction, lower borrowing costs for the government, and create a more resilient market structure.

The role of key market intermediaries would evolve. Clearinghouses like the DTCC and custodians would need to adapt to interacting with blockchain-based records, potentially developing new services for the safekeeping of cryptographic keys and validation of on-chain transactions. Exchanges are already preparing; the New York Stock Exchange’s recently announced plans for a digital trading platform for tokenized assets show the direction of travel. A regulated, tokenized TBIL could become one of the first assets to trade on such a platform, enabling 24/7 trading and instant settlement in a regulated environment. This move would challenge the traditional paradigm of market hours and settlement delays, pushing the entire system toward greater efficiency and accessibility. The end goal is a financial ecosystem where value moves as seamlessly as information does on the internet today.

The Bigger Picture: Tokenization as the Next Chapter in Financial Digitization

F/m’s application is not an isolated event but a prominent data point in a powerful macro-trend. Tokenization of Real-World Assets (RWA) has become the dominant narrative for institutional crypto adoption in 2026, shifting focus from speculative tokens to the digitization of established, trillion-dollar asset classes like bonds, funds, and private equity. BlackRock CEO Larry Fink has likened its potential impact to “the rise of the early internet,” while others have called it the “killer use case” for blockchain in finance.

This trend is being driven by several converging forces. Institutional demand for yield and diversification is pushing asset managers to explore more efficient fund structures. Technological maturity in enterprise blockchain platforms and digital identity solutions has reached a point where large-scale deployment is feasible. Competitive pressure is mounting, with financial hubs like Singapore, the UK, and the EU actively fostering their own tokenization ecosystems. The United States, through regulatory actions like the potential approval of F/m’s request, will decide whether it leads this transformation or cedes ground to other jurisdictions. The TBIL application, therefore, is a crucial test of the U.S. regulatory system’s capacity to foster innovation while upholding its gold-standard investor protections.

Strategic Implications for Crypto and Traditional Finance Investors

For investors in both traditional and digital assets, this development offers a clear roadmap for convergence. In the traditional finance (TradFi) sphere, it represents the gradual, legitimized adoption of blockchain’s benefits. Investors should monitor other large asset managers for similar filings, as approval for TBIL would likely open the floodgates. The efficiency gains could lead to lower expense ratios for ETFs and improved returns over time, making tokenization a factor in fund selection.

For the cryptocurrency and digital asset investor, this is validation of a core thesis: that blockchain’s ultimate value lies in upgrading global financial infrastructure. It moves the narrative beyond Bitcoin-as-digital-gold to a world where all assets are natively digital and programmable. Projects focused on enterprise blockchain solutions, institutional-grade custody, and regulatory technology (RegTech) stand to benefit directly. However, it also presents a challenge to purely decentralized finance (DeFi) purists, as this model embraces permissioned ledgers and existing regulatory frameworks rather than seeking to overthrow them. The investment takeaway is to focus on infrastructure and interoperability players that can serve as the bridge between these two converging worlds.

FAQ

What exactly is F/m Investments asking the SEC to approve?

F/m is requesting “exemptive relief” to allow it to record ownership of shares in its U.S. Treasury 3-Month Bill ETF (TBIL) on a permissioned blockchain ledger. These “tokenized shares” would be legally identical to the fund’s existing shares, sharing the same CUSIP, rights, and regulatory protections, but would utilize blockchain technology for back-end settlement and record-keeping.

Will the TBIL ETF change if this is approved?

For the average investor, virtually nothing will change visibly. TBIL will still invest in 3-month U.S. Treasury bills, trade under the same ticker on Nasdaq, and have the same fees and disclosures. The transformation is “under the hood,” affecting how shares are settled and recorded between institutions, which could eventually lead to lower costs and increased efficiency.

How are “tokenized shares” different from cryptocurrencies like Bitcoin?

They are fundamentally different. Tokenized shares are digital representations of existing, regulated securities (like an ETF share). They are issued by a registered entity, backed by real assets, and governed by traditional securities laws. Cryptocurrencies like Bitcoin are native digital assets created on a decentralized network, not representations of off-chain assets, and have operated in a different regulatory gray area.

Why choose a Treasury bill ETF for this first-ever attempt?

A short-term U.S. Treasury ETF is the perfect “test bed.” The underlying asset (U.S. government debt) is considered the safest in the world, and the fund structure is simple and widely understood. This minimizes risk and complexity, allowing regulators to focus solely on evaluating the novel tokenization technology and its fit within the existing regulatory framework.

What happens if the SEC approves this application?

Approval would set a monumental precedent. It would establish a regulatory pathway for other asset managers to tokenize their funds, likely triggering a wave of similar applications. It would also validate the NYSE and other platforms developing digital asset trading, accelerating the rollout of 24/7 trading and instant settlement for regulated securities. In essence, it would mark the official beginning of the regulated, large-scale tokenization of traditional finance.