On Oct 2, 2020, Jay Clayton, Chairman of the U.S. Securities and Exchange Commission (SEC), hinted at the future tokenization of stock trading.
Speaking at a Digital Chamber of Commerce event that focused on innovation and digital assets regulation, Clayton observed that all stock trading is now electronic.
The SEC Chair explained that the stock market has gradually moved toward digitized entries, unlike in past years, when investors would get stock certificates. He then hinted that digitized stock entries might perhaps become tokenized in the future.
Clayton was speaking at the event alongside Brian Brooks, Acting Comptroller of the Currency (OCC). He stated that the promise of blockchain tech and distributed ledger technology (DLT) was more apparent in boosting efficiency across various sectors.
However, he quickly reiterated the need for innovation within limits, asserting that the principles of responsibility and transparency should apply in the sector.
The SEC Chair added that his agency is now in a better position to implement regulation to the blockchain sector than 3-4 years ago. Such regulatory oversight would offer some much-needed clarity in the sector as the tokenization of various assets gains traction globally.
SEC Move Towards Tokenized Securities
In an official statement published in Sep 2019, the SEC revealed that it was open to the deployment of beneficial tech to the growing class of tokenized securities.
A similar shift toward the tokenization of stocks is underway in the EU. A few months ago, DX.Exchange launched a new platform that facilitates the trading of tokenized shares.
DX.Exchange is now one of the pioneering regulated security token exchanges in Europe. It allows users to purchase tokenized shares with either fiat or certain cryptocurrencies such as BTC.
Furthermore, the exchange offers tokenized securities representing shares in Tesla, Facebook, Amazon, Netflix, Apple, and other major stocks.
More Jurisdictions Embrace Tokenized Assets
In 2018, the state of Delaware passed amendments legalizing blockchain tech use to maintain corporate share registries.
Lawmakers in that US jurisdiction ruled that any tokenized stock or share can legally be admissible in court as evidence of ownership.
Moreover, in Oct 2020, Venezuelan authorities moved to tokenize their stock offerings to circumvent the negative impacts of economic sanctions. The country will now operate a decentralized stock exchange that offers tokenized versions of various traditional assets.
These examples demonstrate that use cases for blockchain in the tokenization of stocks, bonds, or shares have great promise. Indeed, we can tokenize anything from currency to mortgages to art, allowing for easy and quick trading.