Nov 26 (Reuters) – The Securities and Exchange Commission’s possible plan to grant crypto companies relief from regulation to sell “tokenised” stocks risks harming investors, a group of stock exchanges said in a letter to the U.S. regulator this week.
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SEC Chair Paul Atkins has said the agency is working on crafting an “innovation exemption” from securities laws which would enable crypto players to experiment with new business models.
“The SEC should avoid granting exemptions to firms attempting to bypass regulatory principles that have safeguarded markets for decades,” WFE CEO Nandini Sukumar told Reuters.
The SEC, which published the WFE’s letter on its website, declined to comment.
SEC’S NEW APPROACH TO CRYPTO
Tokenising equities typically involves creating crypto tokens which are pegged to a pre-existing stock.
The wider finance industry, including banks, are exploring ways to introduce crypto-related products and services into their businesses.
The WFE’s letter said it was “pro-innovation” and referred to tokenisation as a “natural evolution in capital markets”.
Still, its letter is a sign of the mainstream finance industry beginning to push back against some of the crypto world’s wishlist, especially as parts of the crypto sector start to compete directly with their own businesses.
“We and the crypto platforms should be competing on a level playing field, we should be subject to the same rules,” said James Auliffe, who runs the WFE’s technology working group.
Issuers of tokenised stocks say that integrating blockchain – the technology behind crypto – into equity markets could make trading more efficient.
Auliffe said that stock exchanges are still looking for scenarios in which the benefits of shifting stock trading onto blockchain outweigh the costs. “What you can see from the fact that no one’s done it, is that equity markets in particular are very very efficient already,” he said.
Reporting by Elizabeth Howcroft in Paris and Hannah Lang in New York; Editing by Tommy Reggiori Wilkes and Emelia Sithole-Matarise
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