An advisory committee guiding the U.S. Securities and Exchange Commission (SEC) has voted to support the regulation of stock transactions on blockchains. This move could allow traders to bypass traditional intermediaries in settlement processes.
The SEC's Investor Advisory Committee recommended limited exemptions for blockchain-based stock trading, provided there are mandatory disclosures, regular outside supervision, and assurances that all investors receive the best terms for their orders.
SEC Chairman Paul Atkins stated that tokenized assets are still considered securities under law and require safeguards comparable to the traditional system. The agency is developing formal regulations for tokenization, now bolstered by an official recommendation from the committee, which includes industry veterans, institutional investors, and academics.
Unlike traditional stock trading, which can take days to settle, placing stocks on-chain allows for simultaneous delivery of the tokenized security and payment, with ownership recorded directly on the blockchain.
The committee acknowledged risks, noting that reforms could introduce new, misunderstood risks and potentially increase costs for investors.
Chairman Atkins praised the committee's recognition of tokenization's potential to enhance settlement efficiency, reduce risk, and eliminate unnecessary intermediaries. He anticipates the Commission will soon consider an innovation exemption to facilitate limited trading of certain tokenized securities, with a view toward a long-term regulatory framework.