Wednesday, July 24, 2024

SEC approves BSTX for blockchain settlements on traditional markets

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SEC approves BSTX for blockchain settlements on traditional markets

The Boston Security Token Exchange (BSTX), a new facility of the Boston-based BOX exchange, received regulatory approval from the United States Securities and Exchange Commission (SEC) to operate as a blockchain-based securities exchange. 

BSTX was launched jointly by BOX and Overstock’s blockchain arm tZERO, originally seeking approval for launching publicly-traded registered security tokens. However, the SEC approval to operate as a national securities exchange allows BSTX to use blockchain technology for faster settlements in traditional markets. According to the SEC,

“The Commission notes that the [BSTX] Exchange’s current proposal does not involve the trading of digital tokens and such a proposal, or any other additional use of blockchain technology.”

While the SEC has previously denied BSTX permission to offer crypto-focused services, the latest approval allows the facility to use a proprietary market data feed, BSTX Market Data Blockchain.

In addition, BSTX will also use blockchain technology to help investors experience faster transaction times on the same day (“T+0”) or the next day (“T+1”), instead of the standard two business-day (“T+2”) settlement cycle sported by traditional markets.

Along with the regulatory approval based on BSTX’s rule change proposals (SR-BOX-2021-06), the SEC placed four conditions for BOX in line with BSTX’s operations. 

The requirement includes joining all relevant national market system plans related to equities trading, ensuring Regulatory Services Agreement with FINRA, Intermarket Surveillance Group membership for the BSTX facility, and an applicable governance structure.

Related: SEC reportedly probing crypto lending products by Gemini and Celsius

In line with the above developments, the SEC is also reportedly reviewing some of the high-yield crypto lending products offered by Gemini, Celsius Network and Voyager Digital.

As Cointelegraph reported, the SEC is conducting an inquiry into considering registering crypto lending services as securities. A Bloomberg report on the matter suggests that the SEC’s main concern lies with the high-yield offering by crypto lending services.