Last week Bloomberg reported that the SEC was planning to publish its long awaited tokenization trading exemption for US stocks within days, which would likely allow tokenized stocks to trade on DeFi platforms. But Bloomberg followed up on Friday, saying the announcement had been postponed, although it did not say the plans were being reconsidered. While earlier proposals were limited to issuer sponsored tokens, the latest plans cover tokens issued by third parties.
These third party tokens fall into two broad categories. Those that provide full ownership, dividend and voting rights, and synthetic stocks involving structured loans and derivatives. The current high profile offshore tokenized stocks, such as xStocks and Ondo Global Markets, are synthetics, with SEC Commissioner Hester Peirce taking to X to confirm the planned exemption is not for synthetic stocks and would be of limited scope. That was not clear from the original Bloomberg report, which mentioned dividends and voting. Some of the synthetic products now provide dividends in kind and watered down voting, but they do not provide direct ownership.
Bloomberg reported that the two resistance points to the third party proposals related to concerns about the ability to execute corporate actions such as dividends, and DeFi enabling stocks to be held anonymously. Arguably there’s overlap between the two issues, but the more important question is whether these concerns are well founded or easy to address.
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