All stocks may one day be tokenized: SEC Chairman

  • 05 October 2020, Monday, 17:06

The U.S. Securities and Exchange Commission (SEC), and the U.S Office of the Comptroller of the Currency (OCC) have yet again provided clarity on the cryptocurrency and blockchain regulations in a webinar. In the webinar, SEC Chairman, Jay Clayton, said that SEC’s “door was wide open” for entities to understand how to “tokenize the ETF (exchange-traded funds) in a way that adds efficiency.”

Clayton further expressed his views on the power of blockchain technology and how one day all stocks could become tokenized. But the Chairman believed that current regulations were insufficient to help develop crypto and blockchain tech.

Clayton explained how all stocks today are electronically represented compared to two decades ago when stocks were held via certificates, to which he added:

It may be very well the case that those all become tokenized.

The webinar was held on 2 October by the Chamber of Digital Commerce and blockchain startup Securrency. In it, acting comptroller of the currency at the OCC, Brian Brooks, who also participated, said that blockchain tech was “fundamentally resilient and efficient and that authorities had a “strong interest” in future scenarios where people may speculate on bitcoin price movements, and blockchain become the “internet of finance.”

According to Brooks, who was a former Chief Legal Officer of Coinbase, “most” cryptocurrency projects would fail if they are not “relevant to a particular need.” He added that banking regulators should “drive the framework” in the use case of stablecoins to enhance efficiencies in the payment system and that in the case of tokenization of ETFs, the SEC was “willing to drive” that.

On grounds of what constitutes tokens as securities Clayton stated that:

If you’re not trying to finance your network, you’re not trying to give people a return on your network, it’s probably not a security.

But if what you’re trying to do is finance your network with your token or provide people with a return for using the network with your token, you look at the traditional tested security, it’s pretty clear it’s a security.