On February 23, 2026, the SEC, for the first time, granted an exemptive order permitting continuous trading and settlement for an SEC-registered, tokenized government money market fund.
The fund is a registered government money market fund that seeks to maintain a stable $1.00 net asset value (NAV) per share. Through its transfer agent, the fund uses blockchain technology to maintain a record of its shares, and also permits certain peer-to-peer transactions in tokenized fund shares on applicable blockchains. In the application to the SEC, the fund, along with its investment adviser, affiliated distributor and affiliated transfer agent, requested an exemption from Section 22(d) of the Investment Company Act of 1940 and Rule 22c-1 thereunder, which generally require a registered open-end fund to sell or redeem its shares at a price based on the next-calculated NAV after receipt of a purchase or redemption request (the pricing relief). Specifically, the pricing relief permits the affiliated distributor (and any other registered broker-dealer that has entered into a dealer agreement with the fund or its distributor) to purchase and then sell fund shares to investors from its own inventory on a continuous basis at a price of $1.00 per share (plus or minus dealer compensation), rather than at a price based on the next-calculated NAV per share. Additionally, the applicants requested an exemption from Section 17(d) of the Investment Company Act and Rule 17d-1 thereunder, which regulate certain affiliated joint transactions involving registered funds, to permit the affiliated distributor to enter into an arrangement with the fund to trade its shares in reliance on the pricing relief.
In their application to the SEC, applicants note that offering investors the option to transact in this way offers meaningful benefits including “faster settlement, continuous access to liquidity, and greater operational flexibility,” as compared to traditional mutual fund transactions “that may involve end-of-day NAV pricing, delayed confirmations and/or longer operational settlement windows.” In a press release announcing the granting of the order, the fund sponsor further noted that the approved arrangement “lets investors move into yield-bearing assets in real time, eliminating T+1 delays of traditional markets, reducing cash drag and unlocking the efficiency and liquidity advantages of tokenized assets.” The sponsor also noted that the affiliated distributor had received approval from FINRA to expand its broker-dealer activities to include principal trading of registered fund shares.
