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

source-logo  coindesk.com 29 December 2020 00:30, UTC
  • In a notice filed by the Securities and Exchange Commission Monday, the 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 to the 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.