SEC Meets Blockchain Leaders on Tokenized Securities

The US Securities and Exchange Commission (SEC) met with industry players to discuss a token standard to support the compliant issuance and transfer of tokenized securities. 

The SEC’s Crypto Task Force met with Ethereum-aligned organizations on Thursday, including the ERC-3643 Association, Chainlink Labs, the Enterprise Ethereum Alliance and Linux Foundation (LF) Decentralized Trust.

During the meeting, the blockchain proponents and the SEC explored how open standards like ERC-3643 and compliance frameworks like Chainlink’s Automated Compliance Engine (ACE) could help bridge onchain technology with traditional regulatory requirements. 

ERC-3643 is a token standard aiming to become the foundation for compliant capital markets on the Ethereum network. It’s backed by the ERC-3643 Association and supported by companies like Chainlink. Chainlink ACE is a smart-contract-based framework for tokenized assets like securities or real-world assets (RWAs).

SEC shows openness to industry standards for blockchain compliance

Dennis O’Connell, president of the ERC-3643 Association, told Cointelegraph that the SEC showed a noticeable shift in tone and approach during the meeting, compared with previous years. 

“The task force was very welcoming, engaged and motivated to bring the US into leadership,” O’Connell told Cointelegraph. 

O’Connell said that the SEC showed openness toward industry-led standards during the meeting. He told Cointelegraph that the task force had not previously considered the importance of open standards in blockchain. 

“We laid out our case on why, like other industries, including traditional finance, standards are fundamental to growing crypto in the US and enabling securities to come onchain,” O’Connell added. 

In the meeting, industry representatives presented proposals on all key elements of a regulatory framework for tokenized securities. This included identity, compliance, registry and control. 

O’Connell told Cointelegraph that the task force did not take a definitive stance on tokenized securities. He said they were “open to understanding how new technologies in blockchain meet concerns around identity, control and compliance.”

O’Connell said the meeting resulted from months of behind-the-scenes work, ultimately resulting in a “major step for the industry.” 

He said the ERC-3643 Association and its partners plan to continue engaging with the SEC Crypto Task Force and other US government agencies, in hopes that the US will catch up with global regulation and eventually lead in blockchain adoption for capital markets. 

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SEC Chair Atkins on boosting tokenization

The meeting was followed by positive remarks from the SEC’s head, signaling support for tokenization in the US. 

On Friday, Bloomberg reported that SEC Chair Paul Atkins was considering the creation of an innovation exemption within its framework to boost tokenization.

Atkin said the SEC was considering changes that would promote tokenization, including an exception that would allow new trading methods to support tokenized securities development. 

“If it can be tokenized, it will be tokenized,” Atkins said, recognizing that the movement of assets to the blockchain is inevitable. 

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