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The SEC Plans To Turn Stock Investors Into Crypto Traders
On the blockchain // Image by Kait Cunniff with DALL-E
The SEC is set to officially allow firms to offer third-party digital versions of securities on crypto platforms.
Why It Hits: Stocks, bonds, and other securities are already being traded on the blockchain as exchanges like the NYSE and Nasdaq embrace tokenization, making it easier for companies to issue them. The SEC’s latest moves, led by Chairman Paul Atkins, show that the crypto-ization of finance and the expansion of retail investing are reshaping public markets.
Between The Trades: According to Bloomberg, the SEC wants stocks to operate a little more like the Wild West.
The SEC will allow the “trading of tokens that do not have the backing or consent of the public companies whose shares they track.”
Bloomberg describes them as “effectively a novel way to speculate on the direction of the share price.”
The move would enable the creation of third-party tokens through an “innovation exemption” that allows them to operate under looser regulations than traditional stocks.
But issuers will still need to ensure that holders of these tokens receive the same benefits as traditional stockholders, including voting rights and dividends.
Final Investment: By embracing third-party securities on decentralized finance platforms (DeFi), the SEC is essentially launching a public-market version of the private secondary-share market for the world’s biggest companies — one that mirrors the performance of the stocks those companies actually issue. It’s the Russian nesting doll of finance… except each doll is in someone else’s hands.
While some financial experts praise these tokens for potentially making blue-chip investing even more accessible, others worry they could further “fragment” the market — making it less transparent, manageable, and safe.
Prediction: Mirroring the dust-up at Anthropic last week, expect the third-party tokenization of major public companies to create entirely new headaches when it comes to voting on truly consequential issues — like mergers or CEO pay packages.
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Today’s email was written by David Vendrell.
Edited by Nick Comney. Polled and Copy-edited by Kait Cunniff.
Published by Darline Salazar.