Raising the BarOTCQX Tightens Admission Standards–OTC Markets Group tightened admission standards for its premium OTCQX market earlier this year by implementing Version 11 of the OTCQX Rules. The overhaul will materially raise the bar for companies seeking quotation on the platform. The amendments mark one of the most significant updates in years, reshaping eligibility criteria for both U.S. and international issuers and tightening ongoing compliance obligations. The OTC Markets now hosts approximately 12,000 U.S. and international securities. Each year, these securities collectively generate more than $870 billion in trading volume according to OTC Markets’ latest annual activity report. The rule changes arrive as the platform continues to attract both domestic micro‑cap issuers and a growing cohort of foreign companies seeking U.S. investor access without a national‑exchange listing. Version 11 introduces significantly higher financial and shareholder‑distribution thresholds for companies seeking OTCQX quotation. The minimum global market capitalization requirement has been raised from $10 million to $25 million, while issuers must now demonstrate at least $5 million in public float. The shareholder‑base requirement also has doubled. Companies now must show 100 beneficial shareholders, each holding at least 100 shares, replacing the previous 50‑shareholder standard. This shift toward beneficial ownership is intended to ensure broader investor participation and reduce insider concentration. The updated rules also refine how issuers may qualify under the penny‑stock exemption framework. While OTCQX continues to prohibit penny stocks, Version 11 introduces a narrow conditional pathway for companies maintaining a $5.00 minimum bid price and demonstrating that they will meet full exemption criteria in their next annual report. This temporary bridge is tightly constrained and intended only for companies nearing compliance. OTC Markets added new ongoing obligations as well, including enhanced market‑maker standards and transition provisions for companies already quoted as of April 6. With thousands of U.S. micro‑cap issuers and roughly 450 foreign companies trading on the OTC Markets platform, the Version 11 rules represent a major structural tightening aimed at improving market integrity and investor confidence across the OTCQX tier. The tightening of Rule 11 is part of the OTC Markets’ effort to reinvent an exchange once synonymous with the Pink Sheets, penny stocks and companies that preferred less transparency, not more. For over a decade, the company has pushed issuers toward greater transparency, timely disclosures, and cleaner corporate governance; nudging firms to publish audited financials, maintain current information, and meet higher compliance standards. For more information: https://www.otcmarkets.com/files/OTCQX_Rules_for_US_Companies.pdf and https://www.otcmarkets.com/files/OTCQX_Rules_for_International_Companies.pdf On-Chain Stock TradingSEC’s Tokenization Test Opens DoorAs previously reported in Best Practice, the Securities and Exchange Commission has been preparing to launch a framework for tokenized stock trading, creating a time‑limited “innovation exemption” that allows regulated platforms to test blockchain‑based securities. The framework permits third parties to tokenize digital versions of U.S. public stocks without corporate consent, establishes 24/7 parallel trading markets, and requires that any on‑chain instruments fully preserve shareholder rights. The SEC’s move signals that regulators are preparing for an on‑chain future already emerging across global markets. That future took a major step forward on July 15, when the Depository Trust & Clearing Corp. (DTCC) conducted one of the largest tokenization tests ever attempted in U.S. finance. According to The Wall Street Journal, nearly 40 financial firms and technology providers, including JPMorgan Chase, Goldman Sachs, BlackRock, Vanguard and the New York Stock Exchange were scheduled to participate in the trial run, converting a batch of stocks and Treasurys held at DTCC into digital tokens. The trial allowed participating firms to settle live collateral transfers, repo transactions and equity trades directly on blockchain networks. DTCC’s model creates digital twins of existing securities that carry full legal ownership, dividend rights and governance protections, distinguishing them from synthetic “wrapped” tokens that mimic price movements without conferring shareholder rights. While this initial trial focuses on large, highly liquid assets, its implications also extend to thinly traded, micro‑ and small-cap stocks. Studies suggest tokenization could reduce settlement frictions, broaden investor access and improve transparency; factors that may benefit companies with limited trading volume or analyst coverage. Instant settlement and 24/7 trading could attract new participants, potentially improving liquidity for issuers that often struggle with sparse order books. But the same studies also warn of risks. Thinly traded stocks already experience wider spreads and sharper price jumps; continuous trading could amplify volatility if liquidity remains uneven across on‑chain and traditional venues. Market fragmentation is another concern, with liquidity potentially splitting between blockchain‑based platforms and conventional exchanges. DTCC plans to formally launch its tokenization program in October, a milestone that could reshape how the $114 trillion in assets that it safeguards are processed and traded and may eventually redefine the market structure for small‑cap issuers navigating the shift to digital markets. For 2026 tax yearOBBBA Tax Provisions Set to Take EffectThough 2026 is only halfway over, it’s not too early for businesses and taxpayers to begin preparing for next year’s filing season, especially with several OBBBA provisions taking effect for the 2026 tax year. While the most significant changes were implemented for the 2025 tax year, a new set of compliance obligations and deduction adjustments will debut in 2026. Businesses will face the first full year of expanded reporting requirements under the OBBBA. Employers must continue to provide enhanced documentation for qualified overtime and qualified tip income, part of a broader effort to support new employee‑level tax benefits. The IRS also is rolling out wider information‑return rules for digital‑asset transactions and third‑party payment platforms, requiring companies to capture more detailed data on cryptocurrency transfers, electronic payments, and other digital financial activity. These changes increase administrative burdens but do not introduce new taxes. For individual filers, the most notable update is the revised SALT deduction cap, which rises slightly to $40,400 for 2026. The benefit phases out beginning at MAGI $505,000, and once income exceeds $606,333, the cap fully reverts to the longstanding $10,000 limit. The adjustment is modest but marks the only SALT‑related shift taxpayers will see for the 2026 tax year. Upper‑income households will also encounter new pressure from the Alternative Minimum Tax, as OBBBA lowers AMT exemption phase‑out thresholds beginning in 2026; a change expected to pull more filers into AMT calculations. Families using 529 plans will benefit from expanded flexibility. Starting in 2026, the annual withdrawal limit for K‑12 educational expenses doubles from $10,000 to $20,000, with eligible costs broadened to include tutoring, books, fees, and other instructional expenses. Collectively, these provisions represent targeted adjustments rather than sweeping tax changes, setting the stage for a more compliance‑focused filing season in 2027. Olé, Olé … Oh the tax to pay!Foreign World Cup Players Face Complex Tax ObligationsAnd you thought “Offsides” was hard to figure out. Foreign athletes, coaches, media personnel, and service providers participating in the 2026 FIFA World Cup may leave the United States with an unexpected prize: substantial federal and state tax liabilities. As the IRS Taxpayer Advocate Service (TAS) explains, “any income earned while they’re in the U.S. could potentially be taxed,” including match fees, bonuses, appearance payments, endorsements, and other event‑related compensation. How much? It’s a team sport, and they’ll likely need a team of accountants and tax lawyers to figure it out. Even temporary visitors are subject to U.S. tax rules because compensation is sourced to where services are performed. This means players can owe federal tax, state tax, or both. Some players may also face double taxation if their home country lacks a tax treaty with the United States. According to the IRS, home country is defined as the country of a player’s tax residency. Since many players play for clubs outside where they live, their tax residency may not be the same as their home nationality. According to TAS, individuals from non‑treaty countries are generally subject to a 30% federal withholding tax on U.S.-source income unless a statutory exemption or Central Withholding Agreement (CWA) applies. And it gets more complex. Some states impose a “jock tax” based on duty days spent training or competing within their state borders. Athletes training in California face a whopping 13.3% state tax rate, calculated on the portion of income tied to their time in the state. Some states like Florida and Texas don’t have a state income tax. New Jersey has a state income tax, and it does not recognize treaty exemptions, meaning players may owe state tax even when federal tax is reduced under a treaty. While FIFA and national teams secured federal tax exemptions, and teams may apply for temporary 501(c)(3) status, players themselves receive no federal exemption. TAS emphasizes that nonresident athletes must comply with U.S. reporting rules, including Form 1042‑S withholding. It’s gonna take more time to figure this all out. Is there stoppage? To access the IRS/TAS’s FIFA Playbook, see: |
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