SEC delays decision on tZERO’s proposed security token exchange

The U.S. Securities and Exchange Commission (SEC) has delayed the decision of approving or disapproving tZERO’s proposed security token exchange.

In a letter published Wednesday, the SEC said it is looking for more comments on the proposed Boston Security Token Exchange (BSTX) - a joint venture between BOX Digital and tZERO - which plans to provide a regulated trading platform for security tokens.

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The SEC was scheduled to announce a decision on BSTX today, but due to some legal and policy issues, it is extending the deadline. Specifically, the SEC wants to know whether BSTX’s operations are compliant with parts of the Securities Exchange Act of 1934 and whether the information it has provided so far is sufficient.

Commenters have three weeks to submit their initial thoughts, and an additional two weeks to respond to others’ comments.

The BSTX proposal was initially filed in May 2019, which the SEC published for public consultation in October. Last month, an amended BSTX proposal was filed with the SEC, revising the number of market makers required for an initial listing from two to three, and making listing standards closer to those set by Wall Street exchanges.

But, several firms showed concerns at the time. For instance, Nasdaq SVP Joan C. Conley said the BTSX proposal might place an “unreasonable burden on competition” as the underlying distributed ledger would be exclusively available on BOX.

Further, Conley said, the proposal appears to provide “insufficient” detail regarding infrastructure, impact on the anti-fraud and customer protection provisions of the Act, as well as possible investor confusion. 

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Yogita Khatri is a senior reporter at The Block, covering all things crypto. As one of the earliest team members, Yogita has played a pivotal role in breaking numerous stories, exclusives and scoops. With nearly 3,000 articles under her belt, Yogita holds the records as The Block's most-published and most-read author of all time. Prior to joining The Block, Yogita worked at crypto publication CoinDesk and The Economic Times, where she wrote on personal finance. To contact her, email: [email protected]. For her latest work, follow her on X @Yogita_Khatri5.