A recent SEC order sets in motion plans to bring stock tokens to the U.S. Martin Koopman and Ishmael Asad both hold tokenized stocks. Only Koopman is a shareholder. Koopman, chief product officer at Hazeltree, owns tokens of Figure Technology Solutions that provide the same dividend and voting rights as its Nasdaq-listed stock. Asad, a research analyst at Bitwise Asset Management, holds a Game Stop token that tracks the stock’s price. The difference is now a regulatory dividing line, at least in the U.S. To trade under the SEC’s new framework, a token must give its holder the same rights as a regular share.
Tokenized stocks trade on the blockchain. Until recently, they were a niche option reserved mostly for overseas investors. Now, traditional financial powers, crypto upstarts and regulators are pushing to bring tokenization to the U.S. Last month, the SEC cleared a path for trading venues to offer tokenized stocks in the U.S. through two “innovation exemptions.” These relief orders temporarily exempt authorized trading venues and market makers from certain rules that previously prevented trading in digital tokens that represent shares of listed companies.
Crypto proponents say tokenized stocks could transform financial markets by enabling round-the-clock trading, lowering costs and enabling instant settlement. Skeptics question the need to trade stocks during off hours, arguing that it could leave prices vulnerable to manipulation, excessive volatility and cyber risks. With exchange giants like Nasdaq and the New York Stock Exchange actively working on tokenized stocks, a future where shares are traded on the blockchain could soon become a reality for investors.
Source: Wall Street Journal Markets · Summarized by HeadlinesBriefing