There is only one way to truly represent a security in a chain, and that is through “native” Tokenizationsays Carlos Domingo, CEO of BlackRock-backed Digital Asset Securities Firm Securitize. Decryption Thursday.
This distinction can become more important as corporate experiments with security-based tokens can disrupt investors. This is a concern raised by the U.S. Securities and Exchange Commission earlier this week.
Natively tokenized inventory Ethereumfor example, carry the same set of qualifications that investors receive when purchasing shares through traditional means, such as voting or dividend rights, Domingo said. Natively tokenized assets do not have counterparty risks while avoiding fragmentation issues, he added.
BlackRock’s $2.8 billion Institutional Digital Liquidity Fund (BUIDL) is natively tokenized for securitization, which supported its implementation last year. This is because as an asset manager transfer agent, he directly manages and records the fund’s stock in a chain, which Domingo explained. Transfer agents typically use their own databases instead of blockchain.
“The token represents 100% of security,” Domingo refers to another example of the stock in the Crypto Software Platform Platform. “A single token represents one share.”
Exodus Stock It’s begun In 2022, we traded as tokens on Securitize’s platform, but this year, interest in tokenization has been updated, and Robinhood announcement Tokenized stock trading on Ethereum Layer-2 scaling network arbitrum, and Kraken push XSTOCKS ON Solana Other networks like that BNB Chain.
in statement On Tuesday, SEC Commissioner and Crypto Task Force boss Hester Peirce recommended that companies building tokenized products consider meetings with regulators, considering their obligation to comply with federal securities laws. Tokenization does not provide exemptions from existing rules or regulations, she stressed.
“As as powerful as blockchain technology, it doesn’t have the magical ability to change the nature of the underlying asset,” she wrote. “Tokenized securities are still securities.”
Anthony Tu-Sekine, a partner at Seward and Kissel LLP, leads the company’s blockchain and digital asset practices. Decryption The conversation about tokenization involves crypto, but at the end of the day it is to police securities under existing securities laws.
“People sometimes feel that cryptography should not reduce regulations due to the nature of blockchain,” he said. “That’s not what we’re talking about here.”
In some respects, Peirce’s statement represents a warning to investors shortly after ChatGpt Maker Openai Condemnation The Robinhood movement, which offers so-called stock tokens in Europe, is tied to the fairness of technological darlings. In response, Robinhood said the token would offer “indirect exposure to the personal market” as a “price-based tokenization agreement.”
In fact, Pierce said in a recent statement that tokenized security could be similar to “security qualifications” or “security-based swaps” depending on the situation, as opposed to the fairness of private and public companies.
Robinhood stock tokens have several features aimed at creating a product control environment. US customers are prohibited from purchasing inventory tokens and cannot be sent to other wallets or platforms, and users must KYC verification via identification information.
Kraken also does not allow customers to purchase XStocks, but tokens issued by companies called Backed are not permitted. This means that they are traded freely in decentralized exchanges or are adopted independently on any platform.
As the SEC urges market participants to consider federal securities, regulators are trying to stick to a joint approach to crypto under President Donald Trump. Round Table Discussion Regarding tokenization hosted by the SEC in May.
“In recent history, we seem to have forgotten a very basic concept: that investors and issuers have valuable observations and experience,” says SEC Commissioner Mark Ueda. I said.
Binancethe world’s largest crypto exchange, and now obsolete crypto exchange FTX one time I’ve done it In tokenized stock trading, these products were eventually shelved.
Crypto financing platform Abra has begun offering contracts As a token In 2019, customers were able to be exposed to moments of price of certain US listed stocks and exchange sales funds. According to CFTC, the company “voluntarily stopped” the token after helping with the SEC investigation. Submit.
In 2020, the SEC and CFTC ordered the ABRA to pay a $150,000 penalty to the institutions for allegedly providing unregistered securities and engaging in illegal, non-exchange swap transactions. Abra I agree“Without accepting or denying the findings of the survey.”