SEC Tokenization Exemption Latest News This crypto news from the SEC matters for tokenized stocks; the answer decides which blockchains can host legal on-chain trading in the United States. T
SEC Tokenization Exemption Latest News
This crypto news from the SEC matters for tokenized stocks; the answer decides which blockchains can host legal on-chain trading in the United States.
The SEC tokenization exemption has not settled yet; the SEC has not said if Canton or Ethereum layer-2 networks qualify. It kept its "public and permissionless" test broad; it has not approved any blockchain.
Journalist Eleanor Terrett raised the debate in a post on X. She asked what counts as public and permissionless; she also noted that more companies object to having their shares tokenized.
Meanwhile, three firms plan tokenized stock venues on these networks; public comments and company objections also show a growing split. It runs across the crypto industry and Wall Street.
The SEC has not approved or ruled out any blockchain; an SEC official said the test is broad on purpose.
Three firms plan onchain securities venues on Canton Network, X Layer, and Kronos X Public.
Comment letters split: Some want a tighter definition; others want wider access.
As of Friday, 22 of the 62 companies on OKXICE's list had objected to having their shares tokenized.
The SEC released the exemption in September; it lets qualifying firms trade blockchain-based U.S. stocks. They do not have to register as traditional securities exchanges; the SEC calls these platforms tokenized securities venues, or TSVs.
The main rules are simple:
Smart contracts must be auditable and public.
They must run on a public permissionless blockchain.
Tokenized shares must carry the same rights as regular shares. So, tokens that only track a price do not qualify.
The relief is temporary; the exemptions end five years after publication.
Three firms told the SEC about their TSV plans; each one chose a different network.
TSV LLC: plans to use Canton Network; this blockchain is built for privacy. One of the firm's founders sits on its foundation board.
OKXICE: plans to use X Layer; it is a joint venture of OKX and ICE.
Kephas Corporation:chose Kronos X Public.
OKXICE and Kephas plan to use Ethereum Layer 2 networks; their own corporate groups built them. However, the SEC gave a warning about its list; being on it does not show that a firm has met the rules.
An SEC official also spoke to Crypto in America; firms can start 30 days after they file notices. They do not have to wait for approval if they meet the rules.
The official added that the order is not a rulemaking; the SEC kept the definition broad so firms can try new ideas.
The Solana Policy Institute wants a tighter test; it urged the SEC to look at who controls a network. That means who can check or block transactions; it also means who can change the rules.
Hedera pushed the other way; it asked the SEC to include public but permissioned networks. On these, only approved groups can check transactions.
Others raised a different worry; Omid Malekan of Columbia Business School and securities lawyer Gabriel Shapiro gave a warning. Centralized firms could use the exemption; yet they might not offer the openness and censorship resistance of decentralized networks.
Wall Street group SIFMA also asked for a clearer definition. Better Markets went further; it asked the SEC to pull the exemption and write formal rules.
Many public companies are pushing back on third-party tokenization. As of Friday, 22 of the 62 companies on OKXICE's first list had objected; that is more than a third of the planned issuers.
The order sets a clear process; a venue must give an issuer 30 days' written notice before it lists tokenized shares.
Trading can start only if the issuer does not object in that time; still, SIFMA asked if companies should give clear consent instead of opting out.
The SEC is reading the feedback; it could post more FAQs to answer questions. Bigger changes would need a vote by the full Commission.
Lessons from this short-term plan should shape later formal rules. For now, readers should watch three things:
The first venue launches
More company objections
SEC advice on which blockchain models fit
TSV: a blockchain-based securities venue; it trades tokenized stocks under the SEC exemption.
Permissionless blockchain:a network where anyone can check transactions without approval.
Layer 2 (L2):a network built on top of Ethereum; it handles transactions faster and at lower cost.
The SEC tokenization exemption starts a five-year test for tokenized stocks. Still, the question of which blockchains count as public and permissionless is open.
Canton and Ethereum L2s are the first real tests; the answer will depend on SEC advice, public comments, and how many companies refuse to have their shares tokenized.
YMYL Disclaimer: This article is for informational purposes only and is not financial or investment advice. Readers should verify details through official channels and do their own research before making any decision.
