SEC's Peirce and Atkins outline 'incremental' path forward for tokenized securities as agency readies innovation exemption
Securities and Exchange Commission leadership unveiled details of a proposed innovation exemption for onchain securities, describing it as an incremental step to integrate tokenization technology into U.S. capital markets.
On stage Wednesday at ETHDenver in a question-and-answer format, SEC Commissioner Hester Peirce and Chair Paul Atkins shed light on what an innovation exemption could look like. Atkins has said he plans to unveil a plan to fast-track crypto products in the near future.
The tokenization exemption would "facilitate limited trading of certain tokenized securities on novel platforms with an eye toward developing a long-term regulatory framework," Atkins said on Wednesday.
Over the past year, both crypto firms and traditional finance players, including Nasdaq and the Depository Trust and Clearing Corporation (DTCC), have explored tokenized equities. If approved by the SEC, crypto companies could offer blockchain-based trading of traditional stocks, potentially putting them in direct competition with conventional brokerages.
This comes as global interest in tokenized stocks surges, with Kraken reporting some $25 billion worth of lifetime trading volume in its xStock product. Likewise, Robinhood's real-world-asset-focused blockchain has reportedly generated over four million transactions in its first week of operation.
While the SEC, under Chair Atkin, is accelerating its crypto-related rule-making, it has taken a more cautious approach to onchain securities trading and issuance in the U.S. Prominent SEC Commissioner Peirce previously said that “tokenized securities are still securities.”
In December, DTCC was authorized to tokenize certain highly liquid assets on pre-approved blockchains under a three-year authorization period. Last month, the New York Stock Exchange said it was developing a platform for the trading and onchain settlement of tokenized securities, which could allow for 24/7 trading.
Measured stance
On Wednesday, Peirce noted that some TradFi skeptics of tokenization argue a future innovation exemption could allow crypto firms to bypass existing rules. However, the commissioner voiced a more measured stance.
"Both groups are likely to realize that the innovation exemption is not as monumental as either faction anticipated," Peirce said. "It would be an important step toward facilitating the integration of tokenized securities into our existing financial system, but it would not change the entire financial system overnight."
Atkins said people should be able to trade certain tokenized securities through automated market makers or other decentralized platforms that use algorithms to facilitate trading.
"In my view, market participants should be able to engage with decentralized applications on public, permissionless blockchains if they desire," Atkins said. "But I expect, however, that many Americans will be more comfortable allowing intermediaries to custody and trade on their behalf."
People should make that decision, not the SEC, Atkins added.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
U.S. stocks opened higher and fluctuated, the Japanese yen rebounded more than 1% intraday, 10-year U.S. Treasury yields broke above 5.22% again, and U.S. crude oil once fell nearly 3%.
After the release of U.S. consumer confidence data, the S&P and Nasdaq turned negative, while the Dow is poised to break a three-day losing streak but is set for a fourth consecutive weekly decline. Meta pulled back, falling more than 3% during the session. The U.S. 10-year Treasury yield surpassed 5.22% again, marking a new high for the third day in a row since 2007, while the 30-year yield reached its highest level since 2004. The yen/dollar pair surged 1.2% intraday, as Japanese and U.S. officials successively signaled concerns over the weak yen. Expectations for a diplomatic resolution between the U.S. and Iran are rising, halting crude oil's two-day climb.
US Treasury volatility surges, triggering alarms! BofA’s Hartnett warns of rising deleveraging risks as higher yields become main threat to the market
Bank of America strategist Michael Hartnett warns that the recent sharp rise in volatility in the US bond market is increasing the risk of broader deleveraging in financial markets.
U.S. diesel prices surge 83% this year! Apollo Chief Economist warns: Cost pass-through may make core inflation more stubborn, Federal Reserve can't ignore it
Torsten Slok, Chief Economist at Apollo Global Management, has warned that the inflation threat posed by the surge in U.S. diesel prices to historic highs may be more serious than the Federal Reserve currently realizes.
Crypto prices
More
