SEC Exempt Tokenized Stock Trading: Report

The U.S. Securities and Exchange Commission is reportedly making “innovative exemptions” for blockchain-based public companies trading, even those that refuse to track the share price of their third-party tokens.

Bloomberg reported on Monday that the liberalization could come as early as this week, expanding trading of public companies from traditional stock exchanges to decentralized crypto platforms.

The SEC said it spoke with “hundreds of market participants” to get feedback on how to best tailor its rules for tokenized trading, and proposed that third-party tokens carry the same benefits as common stock, such as voting rights and dividends.

The details are not finalized and could change before the release, Bloomberg reported, citing people familiar with the matter. SEC Commissioner Hester Pearce has pushed for tokenized stock trading to get an exemption for innovation, the sources said.

Blockchain-based tokenization has attracted increasing interest from Wall Street firms over the past few years, as it is seen as offering greater efficiency for trading and settlement than traditional systems.

The New York Stock Exchange's parent Intercontinental Exchange said in January it will launch a tokenization platform for 24/7 trading of stocks and exchange-traded funds using a blockchain post-trade system, one of the biggest developments in the tokenization space to date.

Source: Nate Gerasi

Bullish, the crypto exchange led by former NYSE president Tom Farley, also strengthened its tokenization capabilities earlier this month with the $4.2 billion purchase of transfer agent platform Equiniti.

Supporters of tokenized stock trading say the technology promotes financial inclusion by allowing individuals without a traditional brokerage account or U.S. markets to gain exposure to public companies including Nvidia ( NVDA ), Google ( GOOGL ) and Tesla ( TSLA ).

Related: Kraken Parent Sees Revenue Increase as Payward Token Expands

Despite the expected exemption, some SEC officials do not support the decision to allow tokenized stock trading, according to the sources.

Cointelegraph reached out to the SEC for comment and did not immediately receive a response.

The President guarantees that they will not be exempted.

Meanwhile, Brett Redfearn, one of the largest crypto-native tokenization platforms, Securitize, expressed concern about the expected exemption from the SEC, arguing that enabling third parties to tokenize shares “without an issuer on the table” could lead to division issues.

Redfern said it could give investors confidence in how much their shares are worth.

Source: Securities

Tokenized trading has expanded into the pre-IPO space, allowing investors to gain exposure to desirable private companies before they go public.

However, some of these companies, including OpenAI and Anthropic, have objected to unauthorized tokenized shares tracking their value.

The SEC's token action comes after the Senate Banking Committee advanced the CLARITY Act on Thursday, setting it up for a vote on the full Senate floor next month.

Several industry experts, including “Shark Tank” investor Kevin O'Leary, say Wall Street firms won't fully embrace tokenization until a framework like the Transparency Act is created and ownership issues are ironed out.

Magazine: eToro Founder Gets Bitcoin Right by Believing in 4-Year Cycles