Canton Strategic Holdings Moves to Tokenize Its Own Shares Under the SEC’s New Exemption

Canton Strategic Holdings (NASDAQ: CNTN) plans to put its own common stock onchain, with the company itself sponsoring the tokens. The Canton Network investor announced on Oct. 29 that it had agreed with TSV LLC, a permissioned venue for tokenized NMS stocks on Canton, to make its shares tradable there. It said trading is expected to start as early as Monday, Nov. 2.

The company said token holders would get the same rights as owners of CNTN shares on Nasdaq. The tokens would be created as issuer-sponsored stock by Fairmint, an SEC-registered transfer agent whose onchain ledger would be the official record of who owns them, with each transfer passing its compliance checks.

That is the model Securitize President Brett Redfearn, whose firm also tokenizes shares for issuers, walked through in September. In that setup, “the token that you get is the stock,” Redfearn said on Unchained, adding that “the issuer is involved.”

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The distinction counts under what the company calls the SEC’s Innovation Exemption, the Sept. 17 order that lets permissioned automated market maker venues trade tokenized NMS stocks. If an unaffiliated third party tokenizes a company’s stock, the venue has to notify that company and wait at least 30 calendar days, and an objection from the company keeps the token off the venue. That notice step applies only to third-party tokens.

The objection process is where the tokenized stock venue planned by ICE and OKX has drawn pushback from companies including Walmart, Eli Lilly and Cigna.

Canton Strategic said in its press release that trading is “intended to be the first of its kind under the new SEC rules for tokenizing onshore U.S. equities.” TSV CEO Ali Abrar said in the same release, “We were the first to formally notify the SEC of our intent to operate a tokenized securities venue.”

TSV intends to place the shares in an automated market maker built on the Tradecraft protocol, which Obsidian Software developed. Using it, “approved participants can provide liquidity and trade at any hour, with every trade settling atomically on the Canton Network,” Abrar said in the release. No one can trade until both the participant and their wallet are cleared, a process that includes identity verification and sanctions screening.

The release said that even around the clock, trading would face volume caps and risk controls, and could pause for maintenance or a halt required by regulation. As of Friday, TSV’s website said trading had not yet begun and that starting depends on meeting the exemption’s conditions. TSV also notes on its site that it is not registered with the SEC for this activity and that the agency has not endorsed it.

Related Listen: Why The Innovation Exemption Is a Glimpse at the Next Two Years in Crypto

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