SEC Disapproves BOX Security's Request to Report Stock Trading Data on Ethereum Blockchain
BOX proposed a rule change to the SEC for using the Ethereum blockchain to record and publishing end-of-day securities ownership balances.
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.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.