Tag: shareholder rights

  • New Coalition Targets True Shareholder Rights for Tokenized Stocks

    New Coalition Targets True Shareholder Rights for Tokenized Stocks

    A coalition led by Bullish, Equiniti, Alpaca, Apex Fintech Solutions, and DriveWealth has formed the Issuer Sponsored Token Coalition. The group aims to develop issuer-sponsored tokenized shares that preserve shareholder rights and strengthen links between blockchain markets and traditional equities.

    The coalition will focus on creating standards, infrastructure, and operating frameworks for tokenized securities tied directly to companies’ official shareholder registers. This approach addresses a key issue: some products marketed as tokenized equities may not grant investors the same rights as traditional shares.

    Coalition Targets Shareholder Rights in Tokenized Stocks

    Under the proposed issuer-sponsored model, tokenized securities would connect directly with an issuer’s authoritative shareholder register. This structure could preserve voting rights, dividends, and corporate-action entitlements. Investors holding qualifying tokenized securities would maintain the ownership protections associated with ordinary public shares, while blockchain technology provides new infrastructure without separating shareholders from issuers.

    DriveWealth CEO Naureen Hassan noted that much of what markets describe as tokenized equity does not represent direct equity ownership. The coalition intends to address that gap. An issuer-sponsored model can retain voting rights and corporate-action entitlements as market infrastructure moves onchain.

    SEC Framework Shapes Emerging Onchain Equity Market

    The coalition’s launch follows the U.S. Securities and Exchange Commission’s September 17 Innovation Exemption, which permits limited onchain trading of U.S.-listed equities. The SEC framework requires venues to verify that tokenized stocks provide holders with the same rights and privileges as their traditional equivalents. This requirement places shareholder treatment at the center of onchain equity development. The relief will remain available for five years while the SEC seeks public comments on how the framework should evolve.

    Bullish CEO Tom Farley emphasized that public companies should remain central to relationships with their shareholders. He said market participants need to establish the right architecture as tokenization develops, describing tokenization as a way to turn static assets into more active and transparent digital shares while preserving existing market protections.

    Market Infrastructure Firms Focus on Interoperability

    Alpaca will contribute infrastructure to connect traditional securities markets with onchain systems, building on its Instant Tokenization Network. Arush Sehgal, Alpaca’s Head of Digital Assets, said tokenization creates new ways to connect issuers and investors, but shareholder protections must remain intact.

    Apex Fintech Solutions will contribute experience spanning issuers, broker-dealers, and investors. Global Head of Digital Markets Travis McGhee said connective infrastructure will determine whether tokenized securities can scale, and that standards must preserve existing relationships and investor protections.

    Equiniti and Bullish will work with other participants on the wider standards and frameworks needed for issuer-sponsored securities. The coalition plans to address technical standards, operating structures, and market connections as tokenized public securities develop.

    Final Thoughts

    The Issuer Sponsored Token Coalition aims to connect tokenized stocks directly with company shareholder registers while preserving voting, dividend, and corporate-action rights. Its members will develop standards and infrastructure as the SEC’s five-year framework opens limited onchain trading for U.S.-listed equities.

  • SEC’s Five-Year Innovation Exemption Sets New Rules for Tokenized Stock Markets

    SEC’s Five-Year Innovation Exemption Sets New Rules for Tokenized Stock Markets

    SEC Creates Regulatory Path for Tokenized Stocks on Public Blockchains

    The U.S. Securities and Exchange Commission has introduced a five-year regulatory exemption for trading tokenized stocks on public blockchains. Known as the Innovation Exemption, this framework imposes strict conditions on trading venues, liquidity providers, and the tokens they support. The goal is to foster innovation while maintaining investor protections.

    Key Conditions for Tokenized Securities Venues

    The exemption applies to Tokenized Securities Venues that use automated market maker (AMM) pools to match buyers and sellers. These venues receive temporary relief from registering as national securities exchanges, and certain firms using their own capital to provide liquidity also get relief from dealer registration. However, every venue must operate as a U.S. person and control access to its pools. Federal anti-fraud and market manipulation rules continue to apply. SEC Chair Paul Atkins stated that the measure aims to support new market systems while upholding investor protection standards.

    Permissioned AMMs Required, Open DeFi Excluded

    While public blockchains can host qualifying markets, the AMM pools cannot remain fully open. Each venue must screen traders and liquidity providers before granting access. This means existing pools on Uniswap, Raydium, and other decentralized exchanges do not qualify automatically. These protocols could create separate permissioned pools with identity checks and transfer controls. Raydium already supports permissioned AMMs, giving it some suitable infrastructure, but its stock tokens must meet the SEC’s ownership and issuer requirements before a U.S. venue can list them.

    Full Shareholder Rights Required, Synthetic Tokens Banned

    Eligible tokens must provide the same rights as traditional shares, including dividends and voting rights. The SEC does not permit synthetic products that merely track a stock’s price without conferring ownership rights. According to regulatory conditions reported by Reuters, “Synthetic tokens offering exposure to a stock through a derivative or another product would not be permitted.” This requirement excludes several offshore products from the U.S. framework.

    Securitize and Coinbase Well Positioned

    Securitize appears well placed because it already works with issuers, transfer agents, and regulated financial firms. Its model focuses on tokens that represent legally recognized securities rather than instruments offering price exposure alone. Ethereum could also benefit as it hosts much of this regulated tokenization infrastructure. Coinbase may gain through its U.S. presence, compliance systems, and Base blockchain. However, neither company receives automatic approval; each venue must meet the exemption’s conditions, and every listed token must carry shareholder rights and follow required trading controls.

    Robinhood, Kraken, and Ondo Face Rebuilding

    Robinhood’s overseas stock tokens currently provide economic exposure through securities issued by a Jersey-based entity, meaning token holders do not directly become shareholders in the referenced companies. Kraken’s xStocks and several Ondo Global Markets products also use offshore structures serving non-U.S. users. These providers must create U.S.-compliant products to use the exemption. That process may require new custody arrangements, shareholder record systems, and issuer-approved token structures. Their strong positions on Solana, BNB Chain, and Robinhood Chain do not remove those legal requirements.

    Issuers also receive notice before a venue lists their tokenized shares and may object. This condition could limit listings involving companies that oppose third-party stock tokens. As a result, established market size will not decide which platforms lead the regulated U.S. market. Compliance with ownership, access, and issuer rules will determine which projects can enter.