U.S. SEC advisory panel recommends introducing ‘tokenized securities’… “Related discussions to begin soon”

An advisory committee under the U.S. Securities and Exchange Commission (SEC) has recommended adopting a policy that would allow trading of blockchain-based token securities (ST) on a limited basis.

On the 12th (local time), the SEC’s Investor Advisory Committee held a meeting and formally recommended to the SEC a plan to permit certain regulatory exemptions so that securities such as stocks can be traded in the form of blockchain-based tokens.

The committee said that “if trading in tokenized securities becomes possible, it could simplify the complex brokerage and settlement structure that traditional Wall Street financial institutions have carried out,” adding that “to implement this, conditions such as mandatory disclosures, regular external oversight, and guarantees of best execution must be in place to protect investors.”

The SEC has maintained that tokenized assets also fall under securities under existing law. Accordingly, trading in tokenized securities, too, should be subject to the same level of regulation and investor-protection safeguards as traditional financial markets.

At present, traditional stock trades often take more than a day to complete as they pass through brokers, transfer agents, and centralized settlement systems. By contrast, if securities are issued as tokens on a blockchain, settlement and asset transfers can be processed simultaneously in a single transaction. Ownership records are also stored directly on the blockchain.

SEC Chairman Paul Atkins, in remarks that day, spoke positively of the advisory panel’s recommendation, saying, “Tokenization can improve settlement efficiency, reduce settlement risk, and eliminate unnecessary intermediaries.” He added, “The SEC will review an innovation-exemption program that would allow limited trading of certain tokenized securities,” and noted that “discussions to build a long-term regulatory framework will begin soon.”