Regulatory indecisions in the cryptocurrency industry have often cast a shadow on the developments in the field. Government bodies like the Securities and Exchange Commission [SEC] and the CFTC have made headlines multiple times in the past for hindering reforms relevant to the digital assets world.
According to the SEC news release, the body has put a stop to the fate of the proposed cryptocurrency exchange of tZERO, Boston Security Token Exchange [BSTX]. The aim of the exchange was to provide a regulated and secure platform for security tokens.
The SEC has stated that tZERO needs to provide more data and input for the body to finalize the approval decision. BSTC is a joint venture between BOX and tZERO focused on market leaders and listing requirements. According to the SEC’s statements, BSTX had to prove that it complied with the terms of the Securities Exchange Act of 1934.
BSTX has been given an extended timeline within which the company has to adhere to all the regulations. If it fails to do so, the cryptocurrency exchange will not be permitted to function in the United States mainland. One of the biggest problems in the BSTX proposal was that it left a lot of clauses unanswered. According to a release by the SEC:
“The Commission asks that commenters address the sufficiency of the Exchange’s statements in support of the proposal, which are set forth in the Notice,72 in addition to any other comments they may wish to submit about the proposed rule change.”
To ensure that decision is democratic, the SEC has allowed third parties to weigh in on it. People can either submit their comments online or email the SEC with the subject line being “File Number SR-BOX-2019-37. Third parties will have a timeframe of three weeks from the time of publication to voice their concerns and thoughts. Another two-week extension will be provided to those who want to offer rebuttals to earlier comments.
The BSTX proposal has also received flak from several proponents in the financial world. Just recently, Nasdaq Senior Vice President Joan C.Conley wrote to a letter to the SEC saying that the new proposal would be problematic for its competition. Conley claimed that BSTX’s usage of the underlying blockchain technology would put unforeseen pressure on other exchanges. She added:
“The most salient characteristic – indeed, the only unique characteristic – of the security token is its use of blockchain technology. To avail itself of blockchain technology, the purchaser must be a BSTX Participant. Non-BSTX Participants would be subject to ‘omnibus’ blockchain reporting.”
Nasdaq has recommended that BOX should follow the right track and submit all the necessary documents required for approval. This recommendation was made after the exchanged noted discrepancies in the details submitted by BSTX. Other analysts pointed out that the use of security tokens would add to the burden faced by custodians and clearing firms.