Key Insights:
- Three firms plan tokenized stock venues, but US SEC listing does not confirm compliance.
- Planned venues will use Canton, X Layer, and Kronos X Public as their networks.
- The SEC’s five-year exemption follows debate over issuer consent and investor rights.
Tokenized stock venue plans from three firms have reached the US Securities and Exchange Commission (SEC) under its new innovation exemption.
The agency named TSV LLC, OKXICE, and Kephas Corporation on Wednesday, outlining their intentions to operate blockchain-based trading platforms. However, it cautioned that appearing on the list does not establish compliance with the exemption’s conditions.
Three Firms Detail Tokenized Stock Venue Plans
The three firms plan to use different blockchain networks, with TSV LLC choosing Canton Network. Obsidian Systems co-founders Ali Abrar and Ryan Trinkle own TSV LLC. Trinkle also sits on the Canton Foundation’s board, according to details shared by journalist Eleanor Terrett about the proposed venues.
OKXICE, meanwhile, plans to use X Layer, the Ethereum Layer 2 network developed by OKX. The venture combines cryptocurrency exchange OKX with Intercontinental Exchange.
Together, they plan to offer a platform for trading blockchain-based versions of stocks under the SEC’s exemption.
Kephas Corporation has selected another Layer 2 network, Kronos X Public, for its proposed venue. Perpetuals.com founder Patrick Gruhn, formerly the head of FTX Europe, leads the company’s U.S. subsidiary.
Although the network is public and permissionless, Kephas plans to conduct trading through permissioned pools.
Five-Year Exemption Provides a Temporary Trading Framework
Their tokenized stock proposals follow the SEC’s September introduction of a five-year exemption. That measure established a temporary framework for platforms allowing blockchain-based securities trading.
The agency calls these platforms tokenized securities venues, or TSVs. Before introducing that framework, SEC Chair Paul Atkins outlined the agency’s plans in an April 21 address.
He described an exemption that would permit limited on-chain trading while officials developed longer-term securities rules. That approach formed part of his stated effort to modernize oversight for blockchain and crypto assets.
The framework arrived during a broader shift in the SEC’s approach under President Donald Trump. While lawmakers blocked major digital asset legislation in September, the agency proceeded with its temporary exemption.
That approach followed an earlier period of enforcement actions, including lawsuits against Coinbase and Kraken under Joe Biden’s administration.
Issuer Consent and Shareholder Rights Shaped Debate
The policy discussions also examined who could create products for tokenized stock markets and what investors would receive.
The SEC staff’s January statement identified securities tokenized by issuers from products created by unaffiliated third parties. That difference concerned the relationship between investors, token providers, and the companies behind the underlying shares.
The question of company involvement became more explicit in March. Commissioner Hester Peirce asked whether third parties should obtain issuer consent before issuing tokenized versions of existing company shares.
Bloomberg later reported that officials were considering allowing such products without company permission, before the final framework emerged.
Those discussions extended to custody, settlement, disclosures, voting rights, and dividend treatment. Issuer-sponsored models involved companies or their agents placing securities on-chain within the existing legal framework.
Third-party models instead involved separate providers creating tokenized exposure, raising questions about investors’ legal relationship with the underlying company.
Securitize President Brett Redfearn, a former US SEC trading and markets director, raised a related concern about competing stock-linked products.
He told Bloomberg that third-party issuance without company involvement could produce numerous wrappers tied to the same shares. Such fragmentation, he warned, could leave investors less certain about the value of their holdings at any given moment.
