BSTX Receives SEC Approval for Blockchain-Powered Securities Exchange

Blockchain technology will now be powering a fully automated national exchange for the first time.

Jan 28, 2022 at 6:23 a.m. UTC
Updated Jan 28, 2022 at 4:18 p.m. UTC

BSTX, a joint venture between tZero and Boston Options Exchange (BOX) Digital Markets, has received the green light from the U.S. Securities and Exchange Commission (SEC) to operate a blockchain-based securities exchange.

  • BSTX is aiming for immediate or accelerated settlement (T+0 or T+1) thanks to the transactions taking place on the blockchain. It will also provide market data recorded on the blockchain in a process similar to an Oracle. This will be done via a blockchain run by BSTX, the company said.
  • The exchange will be open to both retail and institutional investors.
  • BOX has been trying to get SEC approval for some sort of exchange since 2020. The first iteration of the application was for a Security Token Offering (STO) platform.
  • In 2020, the SEC declined BOX's application to record end-of-day securities ownership balances and other trading data to the Ethereum blockchain.
  • “The SEC has taken an important step forward today in its approval of BSTX as a national securities exchange,” BSTX CEO Lisa Fall said in a statement. “We are eager to continue to work closely with the SEC to launch a fully regulated new exchange and to help provide capital markets with more modern tools for issuers and investors.”
  • BSTX said it is working to eventually support regulated crypto markets alongside its equity offerings.
  • In a release, the SEC said the approval is conditional on BSTX joining relevant national market system plans. These are structures set up for the dissemination of real-time market information. The SEC will also require BSTX to be part of an intermarket surveillance group, which is an industry working group used to coordinate regulatory compliance.
  • “Today’s approval is only the start for BSTX. We are encouraged and energized by the outreach to date from both traditional and non-traditional finance participants. Utilizing future rule filings, we plan to respond with a series of further innovations that will benefit both the issuer and trading communities,” added Fall.

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