The Future of Digital Securities

I am sharing an interesting article my former business partner and colleague, Glen Barrentine, wrote on the recent SEC Guidance on a broker-dealer running an ATS for Digital Securities… not Digital Currencies.

In short,

• A broker-dealer may operate an ATS for Digital Securities
• The broker-dealer has to review every transaction
• The broker-dealer many not custody the Digital Security  

The review of transactions is the sticky wicket. It means the exchange of Digital Securities ( not currencies) must comply with Federal Securities Regulation. 

As Glen shares, every transaction is being viewed by the SEC through the lens of a penny stock transaction right now, meaning that pervasive reviews are required, including filing SARS reports.

https://www.nortonrosefulbright.com/en-us/knowledge/publications/c2e037e4/secs-division-of-trading-and-markets-issues-no-action-letter

While the digital currency markets might feel like trading OTC or penny stocks, the reality is digital currencies are generally transacted via money transmitters who broker a market for exchanging USD for BTC just like the money brokers who make a market inside the Gatwick Airport exchanging USD for GBP.

The opportunity lies in creating process, systems, and credit intermediation that serve institutions under the regulation for Digital Currencies aligned to help and support Digital Securities when the opportune moment comes.