Tokenized Stocks Get an SEC Sandbox. Who's Left Out?

Days after the Senate declined to advance a vote on the Clarity Act, the SEC issued a five-year exemption order for qualifying automated market makers trading certain tokenized stocks. Rodrigo Cera described it as an incentive-based, venue-focused sandbox for gathering data, not a statute or a completed rulemaking. The order is temporary and volume-capped, and its results could inform more durable rules. Cera also pointed to other SEC activity, including possible Reg NMS revisions, a broker statement, and proposed transfer-agent rulemaking, as part of the broader policy picture.

The order covers issuer-sponsored tokens and third-party custodial tokens, but not linked securities that provide synthetic stock exposure. Eligible tokens must represent the actual share and carry its rights. A third party must notify the issuer, and an issuer objection prevents trading under this exemption. Cera said that condition could prompt debate, citing unsponsored ADRs as a precedent for securities trading without issuer consent. He emphasized that the order permits a particular route; it does not ban other products or settle which tokenized-stock model is better.

Ondo Global Markets, which Peter Curley called the largest tokenized-stock platform by value, cannot use this pathway because its offshore-issued products are equity-linked notes rather than the underlying shares. Curley said Ondo reports about $1 billion in TVL and argues that its products have product-market fit. He also said the company believes its notes can trade legally in the United States, where equivalent structures trade in the trillions of dollars. Separately, Ondo has requested a no-action position for an on-chain tokenized securities entitlement and joined the DTC’s tokenization pilot.

Gabriel Ott said Dinari’s D-Share tokens are backed one-to-one by actual stock and include SIPC insurance, which he considers comparable to protections for shares in brokerage accounts. He argued that synthetic exposure is worse for investors than owning the underlying asset, pointing to safeguards such as best execution and insurance. Curley countered that self-custody can reduce reliance on intermediaries while remaining compliant. In his view, offshore intermediation chains are longer and more expensive, while the cost advantage of reducing intermediaries is smaller in the United States.

The speakers also differed over access and market structure. Curley read the order as requiring public blockchains while keeping both assets and trading venues permissioned, and argued that public, permissionless chains can serve the public interest. Ott said he believed Ondo checks KYC/AML at primary issuance but might allow secondary trades without KYC; he invited Curley to correct that understanding. The exemption does not resolve those disagreements or establish a single standard for access. Commissioner Peirce described it as one pathway among several, with the SEC expecting to consider other models built on the same principles.

Dinari had launched tokenized shares in the United States a few months before the order, under tight limits. Ott said the exemption lets the company test whether US investors want tokenized stocks on permissioned DeFi rails, a question he considers unproven. Curley cautioned that even a one- or two-year test would not definitively establish US product-market fit, since more people may become comfortable transacting on-chain over time. Ott also warned that venues may still need an alternative trading system if later rulemaking does not provide another route. The speakers agreed that US market plumbing needs an upgrade and that blockchains will be part of it, but they disagreed over how much intermediation, issuer control, and investor access tokenized markets should require.