The CEO of the Securities Industry and Financial Markets Association (SIFMA) has written to the SEC expressing concerns relating to tokenized securities. SIFMA members have read press reports implying that digital asset firms might receive SEC no action letters or exemptive orders for trading tokenized traditional securities on digital asset platforms. In other words, the digital asset firms won’t have to comply with the same securities rules that SIFMA members adhere to. Given this could have far reaching consequences for capital markets, SIFMA would prefer to see the process follow the SEC rulemaking process “which allows for public notice and comment, oversight, and broad industry engagement.” SIFMA raised similar issues in a longer letter last month responding to SEC requests for information. An example given by SIFMA was Coinbase looking to trade tokenized securities in the United States. The potential ripple effects become clear when examining Coinbase’s proposals, which represent very substantial changes to market structure, although they expect that parts may be implemented via rulemaking. One potentially controversial example is the best execution rule requiring that a broker shouldn’t execute an order when there’s a better price displayed on another venue. Coinbase argues that this only accounts for price rather than the size of the order or the ability to meet demand at that price. It claims that bitcoin and ether have “better market quality measures” than the vast majority of stocks. “To this end, the Commission should give markets an opportunity to operate without the cumbersome artifice of legacy order routing requirements until and unless markets do not develop in a way that demonstrates they cannot or chose not to provide high execution quality,” Coinbase argued.