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The SEC is leaning toward a decision to allow the trading of tokens that do not have the backing or consent of the public companies whose shares they track, which would be tradeable on decentralized crypto platforms. The move would mark a significant regulatory test of whether stock trading can migrate onto crypto infrastructure without the protections that govern traditional equity markets, and has raised concerns about market fragmentation and investor protection.
“If third parties can tokenize Apple or Amazon without the issuer at the table, there’s no theoretical limit on how many wrappers of the same company exist at once,” said Brett Redfearn, president of tokenization firm Securitize and former director of the SEC’s trading and markets division. “This could create a whole new level of market fragmentation and could leave investors less certain what their shares are actually worth at any moment.”
