The U.S. Securities and Exchange Commission (SEC) could introduce two major initiatives for the crypto industry on Aug. 14, Bloomberg reported. The securities regulator has already announced
The U.S. Securities and Exchange Commission (SEC) could introduce two major initiatives for the crypto industry on Aug. 14, Bloomberg reported.
The securities regulator has already announced that it is holding an open meeting at 10:00 AM ET on Friday to consider whether to issue a release proposing new rules to create a tailored offering regime for certain investment contracts involving crypto assets.
As reported earlier, the SEC's "Regulation Crypto" agenda includes registration exemption of up to four years for crypto startups, fundraising up to a defined amount in any 12-month period without registration, and the status of a token as a non-security once developers aren't the driving force behind a project.
Related: What is tokenization? Explained
As per the Bloomberg report, the SEC could also release the details regarding its "innovation exemption" for tokenized stocks the same day, according to people familiar with the agency’s plans.
As reported earlier, the agency has been planning to release the innovation exemption for a while now.
Tokenization is the process of using blockchain technology to convert real-world assets (RWAs) such as stocks, U.S. Treasuries, real estate, etc. into tradable tokens that represent ownership.
Tokenization not only digitizes stocks but also makes them fractional and accessible assets available for 24/7 trading.
If the plan is implemented, it means traders would be able to buy and sell tokenized versions of equities belonging to public companies like Apple and NVIDIA.
However, these tokens wouldn't necessarily have the consent of the public companies whose shares they track and wouldn't grant the holders traditional shareholder rights.
So there is a high risk that several tokenized versions of the same stock could be floating in the digital assets market. According to the people familiar, the new proposal could allow an issuer to object to any listing of a third-party tokenized version of its stock.
There was another concern that bad actors overseas could take advantage of loopholes in blockchain technology to avoid regulatory oversight of American regulators to access these tokenized equities.
The new plan could have stricter curbs on such trading with additional anti-money-laundering (AML) protections, such as mandating that platforms trading tokenized stocks be U.S. entities, the people said as per Bloomberg.
