Solana Policy Institute Urges SEC to Tighten Blockchain Test for Tokenized Stocks

Solana Policy Institute urged the SEC on Oct. 22 to judge blockchains for tokenized stock venues by who controls validation, censorship and rule changes, sharpening a dispute over eligible network infrastructure.

The institute's comment focuses on control over transaction validation, censorship and changes to network rules. Hedera argued in an Oct. 9 filing that public networks with permissioned validators should qualify. The Securities Industry and Financial Markets Association asked the SEC on Oct. 19 to clarify which networks meet the standard.

The SEC's five-year exemption for tokenized securities venues lets qualifying venues facilitate trading in tokenized U.S. stocks without registering as traditional exchanges, subject to conditions. One condition requires smart contracts to run on a public, permissionless distributed ledger. The disagreement centers on what that requirement allows when validators are permissioned.

Three planned operators have filed notices with the SEC. TSV LLC submitted its notice Sept. 23 and plans to use Canton Network. OKXICE TSV submitted its notice Oct. 4 and plans to use XLayer. Kephas Corporation d/b/a Perpetuals.com submitted its notice Oct. 14 and plans to use Kronos X Public, an Ethereum-compatible layer 2.

A venue must publish its notice at least 30 calendar days before operating and separately notify the SEC within one business day after publication. Meeting that timeline alone does not establish that a venue satisfies the exemption's conditions. The SEC does not separately approve each venue's blockchain choice, and filing a notice does not mean the agency endorses the network.

The SEC invited public comment to inform its consideration of possible changes.