Three Firms Line Up to Trade Tokenized US Stocks Onchain Under SEC Exemption

Three companies have told the US Securities and Exchange Commission (SEC) they plan to run onchain venues for tokenized US stocks. The regulator published their names on Tuesday, and none of them has started trading.

The filers are TSV LLC, a Puerto Rico company that notified the SEC on September 23, and OKXICE TSV, the joint venture Intercontinental Exchange and OKX set up in June, on October 4. Kephas Corporation, which does business as Perpetuals.com, filed on October 14.

London's trading industry is coming home!

All three would operate under the temporary exemption the SEC granted on September 17, which lets approved participants trade tokens carrying the same rights as listed shares.

The venues avoid the rules that bind exchanges but face volume caps. For the most liquid stocks, a venue may trade no more than 0.25% of a stock's average daily volume and list at most 75 symbols.

What the Staff Answers Change

The SEC's Division of Trading and Markets published four answers on the exemption alongside the list. A venue should publish its notice only once its operations and access standards "are established and ready for production," the staff wrote.

The second answer covers tokens created by third parties without the issuer's involvement. A venue may name such stocks in its notice while the issuer's 30-day objection window is still open, but it can trade them only after the window closes with no objection.

If the issuer objects, the venue must say so in its notice and cannot offer the stock. The staff said the answers have no legal force and are not a statement of the Commission, which Paul Atkins leads as chairman.

SEC staff had already set out in January which tokens count as issuer-sponsored and which as third-party, the split the new answers rely on.

Exchanges and Crypto Firms Took Other Routes

For Nasdaq, the SEC approved a pilot for trading tokenized stocks on the company's own market.

Crypto exchanges went to the regulator directly. Coinbase sought SEC approval to launch tokenized stock trading, and Kraken asked for the same for a round-the-clock platform.

TSV LLC, owned in equal shares by Ali Abrar and Ryan Trinkle, plans to run on the Canton Network and pair tokenized stocks with Circle's USDC and Brale's SBC stablecoins, according to its notice.

It set a baseline swap fee of 0.30% per trade, of which 0.20% would go to liquidity providers. Shares are tokenized only by issuers' transfer agents with their authorization, it said, so it has sent no issuer notices.

TSV LLC revised the notice on Monday, adding detail on liquidity provision and paired assets at the start of operations. Trading will not begin before the 31st calendar day after publication, which counted from the first version would be October 24.

OKXICE listed 63 stocks, including Nvidia, Tesla and Apple, in Uniswap v4 pools on the XLayer blockchain, as FinanceMagnates.com reported when its notice came out.

Perpetuals.com plans pools pairing each stock with USDC on Kronos X Public, an Ethereum-compatible layer-2 network. Its summary page names no stocks yet.

In Europe, the European Securities and Markets Authority (ESMA) warned that tokenized stocks could mislead investors when they carry no shareholder rights.

Retail brokers already sell exposure to US shares as contracts for difference, which give clients no shareholder rights either. FM Intelligence's Ask FMIQ answers which of those brokers show the strongest volume growth.

The exemption runs until September 17, 2031, and the SEC is taking public comments on it under file number 4-927.