Today, in a media scrum after his opening remarks at the SEC-CFTC Roundtable on Regulatory Harmonization Efforts, U.S. Securities and Exchange Commission (SEC) chairman Paul Atkins expressed his excitement in regard to bringing tokenized securities on-chain, though he didn’t offer any insight into what platforms or protocols these assets might trade on.
The latter may be particularly important to Bitcoin enthusiasts, because the wallets that you use to trade tokenized securities on-chain will likely require identifying information, and such a rule could spill over to bitcoin wallets.
So, I asked the chairman what securities coming on-chain looked like to him: Would it look like gated platforms like Fidelity and Charles Schwab employing blockchain to settle transactions on the back end or would it look more like tokenized stocks trading on decentralized exchanges?
He did not respond to my questions directly.
He instead first shared how securities trading on blockchains can reduce settlement time.
“The great thing about tokens [is that] you can have payment and exchange of the actual asset online at the same time — it’s T zero, basically instantaneous clearance,” Chairman Atkins told me.
And he followed up this statement with some mildly concerning language.
“So, maybe we’ll have to even build in like a speed bump to make sure that we don’t have any mistakes or wire money to the wrong place,” the chairman added. “We will be working realistically for the next year or two to try to get where we have good guardrails around the system.”
Words like “speed bump” and “guardrails” triggered alarm bells, as they indicate some form of control, and where there’s control, there’s often KYC.
If tokenized securities end up trading within the walled gardens of traditional brokerages, then the issue of KYC isn’t so concerning, as these platforms already KYC their customers.
The issue becomes more critical if tokenized securities can be traded through protocols like Uniswap via wallets like MetaMask and Trust Wallet, which would then likely be required to KYC their users.
If this happens, it begs the following questions: Will this lead to all crypto wallets having to KYC their users? Will this rule eventually bleed over to bitcoin-only wallets?
Based on my interaction with the chairman, I got the impression that he doesn’t currently have the answers to these questions. That is, he wasn’t being evasive as much as he genuinely didn’t seem to know exactly what the broader picture around tokenized securities looks like right now, as he’s waiting for Congress to act.
Much regarding crypto market regulation hangs in the balance as the Senate discusses and revises the CLARITY Act (CLARITY), the digital asset market structure bill. The chairman stated that he’s paying attention to CLARITY as it works its way through the legislative process.
“There’s the market structure act that cleared the House and is now [being discussed] in the Senate,” he told me. “We’ll see what happens.”
Bitcoin Magazine will follow up with Chairman Atkins on this issue when and if CLARITY passes.
In the meantime, if you want to protect your right to use you bitcoin wallet privately and permissionlessly, be sure to contact your elected officials as part of the Satoshi Needs You campaign.