North Capital Private Securities Gets SEC Approval for Token Trading System

The United States Securities and Exchange Commission (SEC) has given the green light for the public Private Execution Network (PPEX), an alternative trading system for private securities and digital assets, to launch in the country. 

Documents have shown that the North Capital Private Securities, a broker-dealer that developed the new trading system, successfully completed the membership application from the Financial Industry Regulatory Authority (FINRA) earlier this year. 

Merging Private Market Convenience with Public Market Liquidity 

Last month, North Capital followed that up by getting approval to file its trading system. The firm. Which is based out of Salt Lake City, Utah, will now launch the trading system in the county, with the addition of digital asset trading services as well. 

The PPEX will enter the American capital market, with North Capital targeting a specific group f traders. Company chief executive Jim Dowd explained that the network would support secondary trades for different types of exempt securities, including blockchain-based digital assets. 

These assets are usually exempt from the normal SEC requirements for security offerings so that they won’t be placed under the same registration n disclosure requirements as publicly-traded products.

Dowd explained that the exemption process is a great way for issuers who don’t want to go through the mental and financial stress of filing with the SEC. However, he also pointed out the fact that private equity markets are less liquid than the public stock market. At the same time, there’s also a lack of transparency that makes it difficult for issuers and traders to discern fraudulent assets. 

The PPEX will help top bring additional clarity, while also providing additional liquidity for the assets.  

 “We’re going to offer a solution that’s kind of in-between a fully private illiquid non-created asset and a kind of a traditional public offering,” Dowd said, adding that he plans to improve due diligence procedures, disclosure requirements, and other processes that will mirror the standard that agencies like the SEC put publicly-traded stocks on.

He also pointed out that the PPEX will provide technological advancement for private capital markets.

“I believe now more than ever that pushing paper and having meetings and signing things in person and doing all these things that we do with private securities could definitely be improved with blockchain.” 

Still No Sign of Allowing Crypto Financial Instruments  

The move underscores a continuing divide in the United States, where government agencies continue to embrace blockchain-based solutions but continue to keep crypto projects away from the conventional financial space. 

Apart from fighting several ICOs in court, the SEC and other financial watchdogs have also denied companies from providing exchange-traded funds (ETFs) and several other financial investment vehicles.

Although many experts – including SEC Commissioner Hester M. Pierce – have counseled for progressive regulations, American financial watchdogs have continued to drag their heels on the topic and are now risking depletion of innovation in the space. 

The PPEX could change that, of course, by hosting some crypto ICOs. However, there’s still a possibility that the SEC could infringe development in that area too.