Last week, the Securities and Exchange Commission (SEC) Cryptographic Task Force strengthened research into how public blockchain technology can support the issuance and trading of tokenized securities.
The group held separate meetings with Nasdaq, Plume Network and Etherealize, explaining how to issue and trade securities on public blockchains.
All three meetings brought about proposals for the concept of a regulation sandbox.
NASDAQ wants a venue that is digitally asset friendly
According to logs from the May 21 meeting, NASDAQ executives urged the task force to ensure that tokenized stocks, bonds and exchange-traded funds (ETFs) are subject to existing registration rules.
Additionally, they sought permission from the new “ATS-Digital” venue, where companies can list digital asset investment agreements along with commodity-style tokens.
Exchange operators also asked regulators to create jointly safe ports with the Commodity Futures Trading Commission (CFTC) for assets of uncertain status.
Often referred to as “regulatory sandboxes,” the idea allows publishers to self-certify classifications while meeting Light Touch disclosure criteria. In April, SEC Commissioner Mark Ueda expressed support for such efforts.
NASDAQ added that tokenization should not undermine the protection of the national market system, and that the move towards atomic reconciliation should balance liquidity and operational risk.
Plume advocates sandboxes for the chain market
The Arbitrum-based Plume Network told the SEC at a May 22 meeting that unauthorized blockchains are ideal for real-world asset tokenization. Additionally, they proposed a regulatory sandbox that covers the 1933 securities and the 1934 exchange law.
The company’s agenda seeks safe port relief, seeking tools to coordinate rules across primary products and adjust secondary transactions on the chain, explicitly factoring in decentralized financial mechanisms and “reliable neutrality.”
In a short meeting log, Plume also sought guidance on tokenization of US and non-US stocks subject to the regulated national market system and other regimes.
Etherealize seeks overhaul of the transfer agent rules
Etherealize and Policy Firm Metalex focuses on back-office infrastructure and tells the task force that legacy transfer agents regulations force issuers to maintain parallel off-chain ledgers and deny blockchain efficiency.
Transfer agents are financial institutions that act as record managers for the company’s shareholders.
Their proposal asks the SEC to recognize a properly secure blockchain as an authoritative shared register, exempt issuers from transfer agent registrations using a decentralized tokenization protocol, and create a high-speed lane for agents specializing in tokenized securities.
They also urged pilots to test the equivalents of smart contracts for corporate measures such as dividend distribution and shareholder votes.
Convergence theme
Throughout the meeting, industry participants sought clear taxonomy, modular rulebooks, and step-by-step pilots.
Furthermore, while each wanted technology-specific tweaks, no one was taking on the SEC’s core investor protection mission.
Task Force staff have shown that future rule proposals can weigh the obligations of sandbox models, dedicated trading venues, and updated transfer agents.
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