Regulation
BSTX Experiences Proposal Delay, as SEC Seeks Further Commentary

Postponed
The SEC has recently released an update on a proposal put forth in 2019 by the, yet-to-launch, Boston Security Token Exchange (BSTX). Despite being considered since last May, the proposal has been postponed. The purpose of this delay is to allow for public commentary.
Final Decision
This move, delaying the final decision, comes after months of deliberation on the proposal put forth by the BTSX. From the time of the initial filing, we have covered developments surrounding the BSTX on multiple occasions. The following articles shed light on this timeline, and what the BSTX is trying to achieve.
Boston Security Token Exchange (BTSX) Seeks SEC Rule Change
SEC Seeks Input on ‘Boston Securities Token Exchange (BSTX)’ Proposal
Changes Proposed
While not all-encompassing, the following are a few of the key points put forth by the BSTX in their proposal for change.
- Asset ownership recorded using a private blockchain
- Trading enabled through use of BSTX tokens
- Whitelisted Clients
Commentary
In their most recent extension, the SEC noted that it was done in hopes that the public would come forth, and share their stances towards the proposal. They stated,
“The Commission requests that interested persons provide written submissions of their views, data, and arguments with respect to the issues identified above, as well as any other concerns they may have with the proposal.”
Expressing Trepidation
Presumably, what prompted this delay is multiple responses received during the first commentary period. While there were only two received, each expressed trepidation towards what the BSTX is trying to achieve.
Of the two responses received, thus far, one was received by a representative of Nasdaq. It is stated,
“Nasdaq respectfully submits that the BOX proposal may place an unreasonable burden on competition because the blockchain (ledger) technology used to track ownership of the security token—the only aspect of this instrument that is unique—would not have a common distributed ledger. Rather, the distributed ledger would be exclusively available on BOX, thereby placing other exchanges at a competitive disadvantage that cannot be remedied by replicating the blockchain offering. Furthermore, the proposal appears to provide insufficient detail regarding: (1) digital securities infrastructure and technology pairing with the existing equities market infrastructure, and (2) its impact on the anti-fraud and customer protection provisions of the Act, as well as possible investor confusion. Nasdaq recommends that BOX submit additional detail addressing these concerns before the proposal is approved.”
Simply put, they break down their issues into two main points:
- ‘The Proposal places an unreasonable burden on competition’
- ‘The Proposal provides insufficient information to assess compliance with the Act or the costs to market participants.’
The commentary, put forth by Nasdaq, closes with a request for more information, stating,
“For the reasons described above, Nasdaq believes that BOX has provided insufficient information concerning the proposal’s impact on competition, how it complies with other aspects of the Exchange Act and Anti-Money Laundering statutes, and how BOX intends to avoid investor confusion. Nasdaq recommends that BOX submit additional detail addressing these concerns before the proposal is approved.”
Boston Security Token Exchange (BSTX)
Founded in 2018, the BSTX is a joint venture between BOX Digital, and tZERO. The goal of the BSTX is to establish a regulated and full-fledged exchange, which offers support for digital securities.
CEO, Lisa Fall, currently oversees company operations.