[Bitcoin Now] US SEC Considers Allowing Stock Token Issuance Without Listed Company Approval

The U.S. Securities and Exchange Commission (SEC) is reportedly considering allowing the trading of tokens that track the share prices of listed companies, even without the companies’ approval.

Reuters Yonhap News

Bloomberg News reported on May 18 (local time), citing sources, that the SEC is expected to announce as early as this week a so-called “Innovation Exemption” related to tokenized stocks that would include these measures.

The core of this measure is to allow trading of tokens that track the share prices of listed companies such as Nvidia, even without the official support or consent of those companies. These tokens can be traded on decentralized (DeFi) virtual asset platforms. However, not all tokens offer rights typically associated with regular shares, such as voting rights or dividends.

Bloomberg explained that these tokens are closer to a new investment tool for betting on the direction of stock prices. The report also noted that this is expected to become a major regulatory test to determine whether stock trading can shift to virtual asset infrastructure without the safeguards applied in traditional stock markets.

Until now, the SEC has classified tokenized securities into two categories. One consists of securities tokenized by the issuer or on behalf of the issuer. The other consists of securities tokenized by a third party with no direct connection to the issuer.

Concerns have been raised that if tokenized securities trading expands into DeFi, it could lead to greater fragmentation of the stock market. This means that assets based on the same stock could be traded separately on various virtual asset trading platforms, resulting in inconsistent price formation.

The Securities Industry and Financial Markets Association (SIFMA) also pointed out in a report published in December last year that if the tokenized market lacks standard requirements such as inter-market connectivity and price transparency, the market “could become fragmented and disorderly.”

Brett Redfearn, President of Securitize and former Director of Trading and Markets at the SEC, stated, “If a third party can tokenize Apple or Amazon without the issuer’s involvement, there is theoretically no limit to how many products based on the same company could exist at the same time.” He continued, “This could take market fragmentation to an entirely new level and make it difficult for investors to be confident in the actual value of the shares they hold at any given moment.”

Tokenization of real-world assets (RWA) has emerged as one of the most notable trends in the virtual asset industry over the past year. This method involves representing real-world assets such as stocks, bonds, real estate, and private loans in digital form. Proponents argue that this approach can improve market efficiency and provide new benefits to investors by enabling fast settlement and 24-hour trading.

This content was produced with the assistance of AI translation services.