VanEck Demands SEC Modernize Regulations for Tokenized ETF Revolution

Wall Street's digital asset pivot hits regulatory roadblocks as investment giant VanEck pressures securities regulators to overhaul outdated frameworks.

The Compliance Chasm

Traditional finance's embrace of blockchain technology keeps colliding with legacy regulatory systems. VanEck argues current ETF rules weren't designed for tokenized assets—creating unnecessary friction and compliance costs that ultimately get passed to investors.

Structural Limitations

Existing settlement systems and custody requirements prevent seamless integration of tokenized portfolios. The firm contends these antiquated structures handicap U.S. competitiveness while jurisdictions like Singapore and Switzerland sprint ahead with digital asset frameworks.

Regulatory Arbitrage Play

As institutions increasingly allocate to tokenized real-world assets, VanEck's push signals broader industry frustration with the SEC's cautious approach. The move strategically pressures regulators before competitors establish irreversible market advantages.

Because nothing motivates regulatory action like the threat of Wall Street taking its business elsewhere—especially when there's fee revenue at stake.

Tokenization and staking on the table

Officials examined the tokenization of exchange traded funds (ETFs), including what it WOULD mean for the issuer that sits behind a tokenized fund. VanEck asked the task force to consider how existing rules apply when fund shares are represented as blockchain tokens and how that might affect investor protections and market structure.

A separate agenda item considered liquid staking tokens. VanEck sought guidance on whether the SEC’s proposed Generic Listing Standards for Commodity and Crypto-Based Exchange-Traded Products apply to staking products, and how exchanges and issuers should handle liquidity risk tied to staking within ETF wrappers.

Wider regulatory questions raised

VanEck also brought up bigger issues it wants regulators to look at, like how decentralized finance (DeFi) platforms, tokenized securities, and ICOs should be handled under today’s securities laws. The firm also suggested that the Advisers Act Custody Rule may need an update so it properly covers the way digital assets are stored and managed.

On custody, VanEck highlighted Multi-Party Computation (MPC) as a practical tool for safekeeping private keys and suggested the SEC consider how technology-driven custody models should be regulated.

Who represented VanEck

VanEck’s delegation included Wyatt Lonergan (General Partner), Kyle F. DaCruz (Director of Digital Assets Product), Matthew Sigel (Head of Digital Assets Research), Jonathan R. Simon (General Counsel), and Matthew A. Babinsky (Associate General Counsel).

The session is part of an ongoing series of meetings between regulators and market participants as the SEC weighs how to adapt securities rules for crypto-era products. Any guidance or rule changes that follow could affect how fund managers design and list tokenized ETFs.

Also Read: SEC’s Crypto Task Force Meets with SIFMA to Discuss Regulations