The SEC Names Three Tokenized Stock Venues. A Watchdog Wants the Exemption Rescinded.

Two developments this week put the SEC's tokenized securities venue exemption under a brighter light: the agency publicly named the first three firms planning venues under it, and a consumer-protection group asked the SEC to rescind it.

The Three Venues

On Wednesday, October 21, the SEC named TSV LLC, OKXICE and Kephas Corporation as firms planning tokenized securities venues, while cautioning that appearing on the list does not establish compliance with the exemption's conditions, according to The Coin Republic.

TSV LLC plans to use the Canton Network. It is owned by Obsidian Systems co-founders Ali Abrar and Ryan Trinkle; Trinkle also sits on the Canton Foundation's board. OKXICE — the joint venture between OKX and Intercontinental Exchange — plans to use X Layer, OKX's Ethereum Layer 2. Kephas Corporation plans to use Kronos X Public, a public, permissionless Layer 2, but would trade through permissioned pools; its US subsidiary is led by Patrick Gruhn, founder of Perpetuals.com and a former head of FTX Europe.

OKXICE is the venue Cerebras blocked from listing its stock (details), and the one Securitize has said it plans to list on (details).

The Legal Challenge

On October 22, Better Markets filed a comment letter urging the SEC to rescind the exemption. Its argument, per its statement and press coverage: the SEC should have adopted the framework through notice-and-comment rulemaking under the Administrative Procedure Act rather than an exemptive order under Section 36(a)(1) of the Exchange Act, and agencies cannot avoid those requirements by labeling a rule an order. Better Markets also says the exemption relieves the new venues of rules covering best-price display, customer data protection, cybersecurity safeguards and insurance requirements, and shifts SEC funding costs onto regulated firms. That is the group's characterization; we have not independently verified the scope of each exemption.

The criticism is not isolated. A statement published October 19 on Columbia Law School's CLS Blue Sky Blog (Shadow SEC Statement No. 17) calls the order likely illegal on similar grounds, arguing it is a rule in substance.

The SEC's position, as laid out in the order and Chair Paul Atkins' accompanying statement, is that the relief is temporary and conditional, that it runs through September 17, 2031, and that experience under it, together with public comment, can inform possible future rulemaking. The order itself was published with a request for comment. Better Markets' point is that comment after issuance is not a substitute for it beforehand.

The Market Context

Tokenized stocks and ETFs recorded more than $37 billion in onchain trading volume in the third quarter, an 18-fold increase since January, according to a Dune Analytics report summarized by Bloomberg on October 22. Dune counted more than 200 venues across 12 chains. We have not seen a breakdown by token structure, so the figure shouldn't be read as volume in share-backed tokens specifically.

That distinction is the other live argument. Securitize President Brett Redfearn has warned that third-party issuance without company involvement could produce many competing wrappers tied to the same shares, leaving investors less certain about the value of what they hold.

Why It Matters

The five-year exemption is the legal foundation for the US tokenized equity venues now taking shape, and it is an order, not a statute. We have flagged that fragility before: with CLARITY failed and Loper Bright limiting deference to agencies, durable rules matter (explainer). Better Markets' letter is the first sustained public attempt to test that foundation. Whether the SEC responds, modifies the order or stands on it is the thing to watch.

→ The exemption explained
→ What is a tokenized securities venue?
→ US Tokenization Regulation Guide