Cryptocurrency continues its push to become more significant, according to Cointelegraph, which reported that the U.S. Securities and Exchange Commission (SEC) is in early talks to develop a method for blockchain-registered stocks to trade on crypto exchanges.
If properly developed, this move would be a step forward in integrating digital assets into traditional financial systems, as it would allow investors in the stock market to purchase and sell stock tokens on approved cryptocurrency platforms.
Companies have already expressed interest in stock tokenization in recent months. Coinbase is reportedly seeking approval from the SEC to offer tokenized equities, while the Nasdaq has asked for approval to change a rule that would let it list tokenized securities, per Cointelegraph. Meanwhile, crypto exchanges Kraken and Robinhood have reportedly already begun offering tokenized stocks on their platforms.
However, not every business is thrilled by the prospect of crypto stocks, as traditional finance companies have pushed back against the idea. According to Cointelegraph, Citadel Securities wrote in a note to the SEC's Crypto Task Force in July: "Tokenized securities must achieve success by delivering real innovation and efficiency to market participants, rather than through self-serving regulatory arbitrage."
Tokenization has already made a dent in the markets, with approximately $31 billion in assets currently tokenized, with Binance Research estimating that these stocks could exceed $1.3 trillion if a mere 1% of global equities were transferred to the blockchain. In fact, due to the recent growth of these stocks, researchers have predicted that tokenization "may be nearing a major inflection point in the broader transition to hybrid finance," according to Cointelegraph.
Whether this potential move heavily influences financial markets remains to be seen, but this proposal could negatively impact the environment.
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Cryptocurrency operations draw massive amounts of electricity to meet energy demands, increasing the amount of heat-trapping gases in the atmosphere, while also sometimes destabilizing electric grids and negatively affecting communities. In fact, according to EnergyStar, one cryptocurrency transaction consumes about the same amount of power as six houses would in a single day.
That said, there is not only potential for these crypto operations to help finance the development of renewable energy projects, but also for renewable energy sources to power these operations.
This rapidly growing space is complex, with the potential to either promote sustainability or move in the opposite direction, and it remains to be seen where the markets will lead.
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