SEC’s New Framework for Tokenized Stocks Faces Challenges
- The SEC allows trading of stock tokens through automated market makers (AMMs), enabling potential round-the-clock trading.
- Tokens must represent NMS stocks and maintain rights such as dividends and voting, with trading volume capped.
- Third-party tokenizers must notify companies before trading, allowing issuers a 30-day objection period.
- Conversations with issuers show minimal interest in tokenizing stocks, particularly outside crypto-adjacent firms like Figure.
- During a recent analysis, 99.9% of Figure’s notional trading occurred through traditional shares, not blockchain-native options.
The SEC’s framework aims to innovate stock trading but imposes strict regulations that may hinder adoption compared to international models. Limited issuer interest further complicates the landscape for tokenized stocks in the U.S.
With only 30 days for issuers to object to tokenization and significant reliance on traditional shares, the demand for these new products remains uncertain. (Source)
