SEC Panel to Discuss Regulatory Changes for Tokenized Equities on Dec. 4

On December 4, the Investor Advisory Committee of SEC will hold a virtual session to consider whether tokenized equities should be reclassified under U.S. securities rules. The hearing begins with 10 a.m. Eastern Time and will be aired via the SEC website.

SEC Examines the Place of Tokenized Equities in Existing Rules

A press release by the agency has confirmed that the agenda is devoted to regulatory changes. These changes may affect how digital representations of equity securities are issued, traded, and settled in regulated markets.

The committee will host a panel dedicated to tokenized equities and the regulatory structure that governs them today. The discussion will evaluate whether current rules provide enough clarity for issuers and trading platforms.

It will also examine the use of blockchain based systems to manage company shares. This follows recent remarks suggesting that U.S. regulators may coordinate to bring clearer guidance to new digital financial markets.

The panel will also consider the way settlement processes can evolve when tokenized equities are introduced in traditional markets.

The SEC highlighted that it is not to come up with new laws at the moment but to analyze the function of tokenized equities under the current legislation.

Committee Plans a Review of Governance Standards

Another panel will provide updates in corporate governance which can impact issuer responsibilities and reporting requirements. The committee will look at the applicability of governance standards to the technology that enables companies manage shareholder records and disclosure.

The committee will also come up with recommendations that could be adopted by the SEC. Such recommendations include disclosures for issuers when applying artificial intelligence for their operations.

According to the agency, more issuers are adopting automated tools to perform analytics and communications. Hence, this leads to new expectations regarding transparency.

Meanwhile, the Investor Advisory Committee was formed to provide policy recommendations that safeguard investors and make the U.S. securities market structure more robust. This is in line with an attempt by the SEC to categorize crypto assets.

The Committee was given the power in Congress to make its findings to the Commission. Thus, SEC indicated that the findings indicate continued changes in the functioning of financial instruments and corporate systems.

Regulators Take Compliance Roads on Tokenized Equities

The sign of increasing attention to tokenized equities indicates the desire to invest in regulated digital asset constructions that can be included in the current definition of securities. This aligns with the recent actions by U.S. regulators to permit on-chain stock buying as the securities are currently regulated.

Those companies that desire to issue tokenized shares are also waiting until there is more definitive guidance on compliance that would allow it without regulatory issues.