SEC Stock-Token Exemption Will Likely Let Companies Opt Out, Securitize’s Brett Redfearn Says

Brett Redfearn, president of Securitize and director of the SEC’s Division of Trading and Markets from 2017 to 2020, expects the agency’s delayed exemption for tokenized stocks to let public companies object before someone else puts their shares onchain.

“I believe that the innovation exemption is likely going to do something akin to an issuer opt-out,” Redfearn said on Unchained in an interview recorded Sept. 10. Under the design he described, a firm that wants to tokenize a company’s stock would first have to notify the company, which would then get “a certain period of time, I don’t know, 30 days or something, to, like, say yay or nay.” A company that says no would keep its stock off the platform. For one that stays silent, he said, “if they don’t respond, people are gonna go ahead.”

The SEC has not published the exemption, which it delayed in May and again in August.

Redfearn said early expectations were that the exemption would not require any company sign-off, and that the idea drew pushback, including from the Securities Transfer Association. The trade group, which represents the firms that keep companies’ shareholder records, said in a July 1 letter that any exemption “should apply only to Issuer-Sponsored Tokens.” Securitize builds that kind of token, putting shares onchain with the issuing company’s involvement.

Robinhood sits on the other side. Its stock tokens, sold to investors outside the U.S., drew an objection from AMC this month. “Going onchain shouldn’t give the issuer a veto it never had offchain,” CEO Vlad Tenev wrote in a post on Friday, arguing that companies should weigh in only when a product changes shareholders’ rights or the official record of who owns the stock.

On Monday, Tenev said in another post that in-kind redemption and voting are coming to Robinhood’s stock tokens.

Redfearn said that if Robinhood brings its offering to the U.S., he believes the SEC “will mandate that it includes full security entitlements, including votings and dividends and corporate actions and the like.”

Related Listen: Should Stock Tokens Be Limited to KYC’d Users? Or Be Tradeable by Anyone?

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