SEC Gives Green Light to Tokenized Stock Trading on Wall Street

The US Securities and Exchange Commission (SEC) recently approved tokenized stock trading, allowing blockchain-based venues to trade tokenized versions of listed US stocks without registering as exchanges.

The order issued on September 17 has some limitations, including caps on symbols and volume, and it expires after five years. Issuers also have a chance to object before tokens are listed by outside firms.

Nick Cherney, head of innovation at Janus Henderson, said the current trading infrastructure can move to blockchain with little visible difference for investors. He noted that cost savings alone will not drive adoption, as US markets are already efficient.

Gabor Gurbacs, founder and CEO of tokenization platform Openassets, expects tokenization to remove six or seven intermediaries in buying a stock today, which currently passes through about nine. This shift is made possible by new transfer agent rules that govern who records share ownership.