- Solana advocates clearer tests for validator control, while Hedera asks the SEC to include public but permissioned blockchains under its exemption.
- Twenty-two of 62 companies on OKXICE’s original list had objected to tokenization as of Friday, including Wells Fargo, Arm Holdings and Intuit.
- The SEC’s five-year exemption runs through September 17, 2031, with broader changes requiring Commission action and potential formal rulemaking.
The U.S. Securities and Exchange Commission’s tokenization exemption is drawing questions over which blockchains can support tokenized stock trading. Comments from crypto groups, financial industry representatives and legal experts challenge the definition of “public and permissionless.” The debate comes as three firms prepare tokenized securities venues under the temporary framework introduced in September.
Solana and Hedera Clash Over Blockchain Eligibility
The exemption requires tokenized securities venues to use auditable smart contracts deployed on public, permissionless blockchains. However, the SEC’s broad definition has prompted competing requests for clarification.
In a Thursday letter, the Solana Policy Institute urged the SEC to assess who controls validators, transaction approvals and network rules. Hedera, meanwhile, asked the regulator on October 9 to include public but permissioned networks, where approved entities validate transactions.
Columbia Business School’s Omid Malekan and securities lawyer Gabriel Shapiro warned that centralized operators could retain control while benefiting from the exemption. SIFMA also requested clarification and questioned whether issuers should have to opt out of tokenization. Better Markets called for the SEC to withdraw the exemption and pursue formal rulemaking.
SEC Reviews Comments as Stock Issuers Object
Three firms have notified the SEC of plans to operate tokenized securities venues. TSV LLC intends to use Canton Network, while OKXICE plans to use X Layer. Kephas Corp. intends to operate on Kronos X Public, an Ethereum-compatible Layer 2.
An SEC official told Crypto In America that firms can begin operating 30 days after filing notices, provided they meet the exemption’s conditions. The agency does not approve each blockchain before launch, and its staff may issue additional frequently asked questions. Broader changes would require Commission action.
Meanwhile, objections to tokenized shares are increasing. As of Friday, 22 of the 62 companies on OKXICE’s original list had objected. Reuters reported six additional objections, including Wells Fargo, Arm Holdings and Intuit.
The SEC’s temporary exemption runs for five years, through September 17, 2031. The agency says feedback could inform future formal rulemaking, while firms continue preparing their proposed trading venues.
