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In a surprise move, 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, the people said. These “third party” tokens — effectively a novel way to speculate on the direction of the share price — would be tradeable on decentralized crypto platforms, though not all such instruments necessarily carry the same benefits as normal stocks, such as voting rights or dividends. Under the SEC’s proposal, platforms that fail to provide those benefits would lose the right to list the tokens.
“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.”
