A Delaware company is seeking to register with the U.S. Securities and Exchange Commission (SEC) for on-chain over-the-counter (OTC) stock trading.
BlackStar Enterprise Group has been developing the platform since 2018 and spent nearly two years engaging with regulators, answering dozens of questions and comments from examiners. More recently, the company has taken the next step by providing the SEC's Division of Trading and Markets with detailed plans for how its platform will operate.
BlackStar CEO Joseph Kurczodyna told Cointelegraph that he sought permission from the SEC in 2018 to build a demo of the platform. rules," the senior executive commented. The company said in its filing that the platform will allow trading of OTC securities within the existing regulated brokerage ecosystem of the Financial Industry Regulatory Authority (FINRA) and the SEC. As stated in the docs:
“For example, clients will continue to use brokerage accounts and broker-dealers, and transfer agents will continue to maintain shareholder records. [...] All custodial duties are intended to remain unchanged, as the platform will pass encrypted client information to the appropriate parties to buy and sell orders.”
According to Investopedia, OTC trading refers to the process of trading securities through a network of broker-dealers rather than through a centralized exchange such as the New York Stock Exchange (NYSE). BlackStar's platform is built on a private blockchain powered by the Amazon Quantum Ledger Database. It will remain in beta until it is licensed by a broker-dealer, clearing firm or alternative trading system (ATS), Kurczodyna said.
Once approved, both the SEC and FINRA will become certificate holders in the blockchain with full access to transactions. The platform does not support tokens, encrypted assets and short selling transactions. “From a timing standpoint, we believe this is an exciting time for BlackStar. Our proposed digital trading platform could help resolve several existing transaction issues, including with US financial markets Fraud-related concerns,” Kurczodyna claimed, arguing that the platform will increase transparency and reduce the risk of investing in over-the-counter stocks.
There is a similar development in Germany, where the government wants to use blockchain technology to facilitate stock trading. A recent piece of legislation aimed at digitizing capital markets by issuing electronic securities on a blockchain aims to make it easier for start-ups and small businesses to access the stock market.
