Key Highlights:
- SEC is reviewing proposals to allow stock trading on blockchain platforms.
- Paul Atkins announces that crypto regulations are his top priority at the CFTC and SEC roundtable meet.
- Blockchain based stocks has the capacity to offer faster settlements, transparency and broader retail investor interest.
The U.S. Securities and Exchange Commission (SEC) is considering proposals to bring stock trading onto blockchain platforms. If this materializes, it could change the way securities market functions moving forward. The idea itself indicates a sense of openness to new technologies, with blockchain increasingly seen as a key foundation for the future of finance.
Paul Atkins, the current chairperson of the SEC, yesterday addressed the joint roundtable between the SEC and the CFTC (Commodity Futures Trading Commission) and noted that at present, cryptocurrency regulation is one of his main priorities. He even highlighted a new era of collaboration between the SEC and the CFTC and called it the age of harmonization.
Paul Atkins then moved ahead and emphasized that regulators are now moving towards a more innovation friendly approach, indicating a clear break from the cautious stance of the past.
SEC Reviews Stock Trading on Blockchain
U.S. stock trading has been relying on centralized exchanges and intermediaries to manage the clearing and settlement of trades. Blockchain technology, on the other hand, would provide a decentralized, transparent alternative that is efficient and could simplify the process substantially.
Using distributed ledger technology, transactions could settle almost instantly, lower counterparty risks, and could cut operational costs as well.
Sources that are familiar with the SEC’s review, indicate that proposals being considered include testing blockchain-based trading platforms that could operate legally alongside traditional exchanges. This would let investors buy and sell stocks while maintaining an unchangeable record of ownership on blockchain ledgers. This change could improve market transparency and shorten the settlement period from the current two days (T+2) to near real-time.
Industry supporters think that the blockchain stock trading could create new opportunities for fractional ownership, allow retail investors to access markets with smaller amounts of capital. It could also speed up post-trade processes and reduce the chances of settlement failures.
Paul Atkins : Crypto is a Top Priority
Paul Atkins, who has held multiple regulatory and advisory roles in digital assets, said yesterday that cryptocurrency has become a central focus for regulators. “It is a new day at the SEC and CFTC,” he stated. Atkins called this period one where the agencies work together in a harmonized way to establish an “innovation-friendly oversight” framework.
This coordination and cooperation between the SEC and CFTC is important because both of these agencies will provide clearer guidance for the fast-moving crypto market. The rules will include securities, commodities, and decentralized protocols. By coming together and aligning their approaches, the agencies aim to reduce confusion and support an environment where legitimate crypto projects can grow.
Atkins’s comments also indicate a shift in the philosophy. Previous SEC strategies were enforcement based which drew a significant amount of criticism that these regulations hindered innovation. With leaders like Atkins shaping policy, the focus has shifted towards working collaboratively with industry to create clarity and encourage responsible innovation.
Implications and Outlook
An important step that could boost the uptake of decentralized finance (DeFi) in conventional markets is the SEC’s review of blockchain-based stock trading. Blockchain-based stock exchanges have the potential to revolutionize trading infrastructure framework for risk management, transparency, and reporting if they are approved.
Regulators around the world are investigating comparable programs, testing blockchain trading and settlement to cut down on inefficiencies while preserving investor protections.
A blockchain-enabled record of stock ownership may provide several benefits to the investors. The development can lead to quicker settlement, the transaction fees can be reduced, and a reduction in middlemen. New opportunities, such as fractional shares and tokenized securities, may become available to real investors.
Also Read: First Joint SEC-CFTC Roundtable in 14 Years Focuses on Crypto
