The SEC has taken an important step toward allowing familiar stocks to trade on blockchain networks. Under a new temporary “Innovation Exemption,” approved platforms will be able to offer tokenized versions of publicly traded US shares through blockchain based trading venues.
In simple terms, a tokenized stock is a digital representation of a conventional share. Someone purchasing a tokenized share of a company should receive the same basic economic and ownership rights as someone holding the traditional version, including dividends, voting rights and a claim on assets if the company is liquidated. The exemption does not cover products that merely track a stock’s price without conveying actual ownership rights.
The trading system will also look different. Instead of matching individual buyers and sellers through a traditional stock exchange, these platforms can use automated liquidity pools. A computer program sets the price according to the supply of assets in the pool, much as decentralized crypto exchanges operate today.
Although the technology must run on a public blockchain, the market itself will not be open to everyone. Participants must be approved, and platforms will still need to follow rules covering investor eligibility, recordkeeping, trading halts, disclosures and transaction reporting.
The program could eventually make stock trading available around the clock. Tokenized shares might trade overnight while the conventional market is closed, potentially creating price differences and new arbitrage opportunities. However, the SEC is starting cautiously. The number of eligible stocks and the amount that can be traded will be limited.
Public companies that did not authorize the tokenization of their shares will receive notice and have 30 days to object. The exemption applies only to secondary trading, not initial stock offerings, and expires in September 2031 unless it is extended or made permanent.
This is not the wholesale migration of Wall Street onto blockchain. It is a regulated experiment, but one that could provide the clearest test yet of whether public blockchains can become part of mainstream stock market infrastructure.
NYC Wins When Everyone Can Vote! Michael H. Drucker
No comments:
Post a Comment