SEC Disapproves BOX Security's Request to Report Stock Trading Data on Ethereum Blockchain

In a notice filed by the Securities and Exchange Commission Monday, the U.S. regulator declined to approve a rule change for tZero-backed BOX Exchange Inc., which intended to offer blockchain-based stock trade reporting.

The proposal intended to have National Market System (NMS) stocks use BOX's blockchain trading venue, also known as Boston Security Token Exchange LLC (BSTX).
BOX initially filed the proposal Feb. 28, with multiple amendments added later. The exchange is a joint venture with tZero and began participating in security token offerings (STOs), blockchain-based security instruments, in 2018.
The firm proposed using the Ethereum blockchain for recording and publishing end-of-day securities ownership balances, but did not specify how it would surveil and report transactions for compliance.
The SEC's major concern: Inaccurate information being published to the blockchain, as BSTX intended to use an "omnibus wallet" for non-BSTX stock transaction data, which the regulator feared could not stay up to date.

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