SEC Unveils Temporary Framework for Tokenized Stocks on Public Blockchains
The US Securities and Exchange Commission (SEC) has made a significant move towards bringing Wall Street stocks onto public blockchains. A temporary regulatory framework will allow certain tokenized U.S. equities to trade using decentralized finance infrastructure.
This is not the first time tokenized stocks have been experimented with, but this marks a major breakthrough in allowing secondary-market trading to take place using mechanisms closely associated with crypto and DeFi.
The SEC's framework will enable Automated Market Maker (AMM) liquidity pools to buy and sell tokenized shares. These AMMs rely on smart contracts and pools of assets rather than traditional order-book models used by major stock exchanges.
What's more, the SEC requires the smart contracts behind these venues to be public and auditable, operating on a public, permissionless distributed ledger.