This week Bloomberg reported that the SEC is planning to unveil a framework for trading tokenized equities, a sandbox that would allow third parties to issue blockchain-based tokens tied to publicly traded equities and let them trade on DeFi platforms without requiring issuer approval. These tokenized shares trade around the clock and settle faster than ordinary stock, and the exemption would let them do so under a lighter regulatory structure, without a full exchange or a broker-dealer license.
What changes is who controls access to a company’s stock. Today a share is an entry in a broker’s ledger, ownership can only be achieved through an intermediary that serves your jurisdiction and trades on its schedule. A tokenized share is a claim you hold in your own wallet and can move directly, at any hour, without a broker or the company granting permission. The technology has existed for years. What is new is a regulator drawing the legal pathway.
The exemption targets already-public stocks, but the same structural pressure is becoming evident in the pre-IPO market. In the two weeks before Cerebras Systems listed on Nasdaq last week, a permissionless perps market on Hyperliquid (via Trade.xyz) processed over $200 million in notional volume on the company. The volume-weighted average price in the final hour before the first Nasdaq print landed within 1.2% of the opening price. A SpaceX market followed days later, clearing $41.6 million in the first 13 hours. These are not the same mechanisms as the SEC exemption, but they are the same force: onchain markets claiming equity exposure in a hitherto firmly closed and opaque marketplace.
What connects them is a set of gating functions that equity markets have long relied on: trading hours, settlement windows, issuer consent for secondary issuance, and the IPO’s monopoly on price discovery for private companies. The SEC exemption addresses the first three directly. The pre-IPO pricing activity on Hyperliquid is evidence of the fourth: the IPO is no longer the first trade.
This week’s market
- BGCI Index -4.14%
- Bitcoin -4.19%
- Ethereum -5.95%
- Solana -4.85%
All figures are week-to-date as of today 14:00 CET
Theta Blockchain Ventures content
- Ruud Smets in The Alternative Investor
Trust is one of the most expensive inputs in economic life, but blockchains change this arithmetic (read the full article)
Blockchain news
- SEC to propose tokenized stock framework as Wall Street efforts deepen (learn more)
- Boerse Stuttgart adds Societe Generale, SG-FORGE, and flatexDEGIRO to ‘pan-European’ tokenized settlement network (learn more)
- Standard Chartered to acquire remainder of subsidiary Zodia Custody (learn more)
- Pan-European stablecoin effort expands to 37 lenders in push back against U.S. dollar dominance (learn more)
- Federal Reserve proposes limited master accounts long pursued by crypto firms (learn more)
- CFTC sues Minnesota over first explicit state ban on prediction markets (learn more)
- Polymarket* Partners with Nasdaq to Resolve Pre-IPO Prediction Contracts (learn more)
- Blockchain.com confidentially files for US IPO as crypto firms continue public market push (learn more)
Relevant financial updates
- Deloitte has acquihired the team at Blocknative*, a blockchain infrastructure company focused on mempool monitoring
- Moonpay* has acquired Decent, a solution for cross-chain transactions, for an 8-figure amount
- Tether has acquired SoftBank’s entire 25% stake in the Bitcoin treasury and operating firm Twenty One Capital (XXI)* for $711mln
- Dunamu, a centralized cryptocurrency exchange, has received a $669mln strategic investment from Hana Financial Group
- Variational*, a decentralized exchange and perpetuals trading platform, has raised $50mln in a Series A round led by Dragonfly with investments from Coinbase Ventures and Bain Capital Crypto
- SignalPlus, a centralized cryptocurrency exchange platform, has raised $40mln in a funding round led by Hashkey Capital
- Catena Labs*, a software development services provider, has raised $30mln in a Series A round led by a16z crypto and Acrew Capital with investments from Coinbase Ventures, IDG Capital, General Catalyst, and 3 others
- Eisen, a compliance operations infrastructure company for fintechs, banks, and digital asset firms, has raised a combined $18.5mln over two rounds led by Index and MissionOG with investments from First Round Capital, Homebrew, Restive Ventures, and Cowboy Ventures
- TownSquare, a crosschain yield infrastructure platform, has raised $16.3mln in a pre-Series A round with investments from World Liberty Financial, Amber Group, OKX Ventures and others
- Checker*, a decentralized payments and stablecoin infrastructure platform, has raised $8mln in a Seed round with investments from Framework Ventures, Galaxy Ventures, and 14 others
- Cycles*, a multilateral clearing startup for onchain finance, has raised $6.4mln in a funding round led by Blockchange Ventures with investments from Coinbase Ventures, Primitive Ventures, and Compound VC
*Underlying TBV portfolio position | Prices as per 22/05
Interesting things to read and listen to
- 6th Man Ventures GP Carl Vogel explains why tokenized assets are about to draw trillions from institutions chasing better risk-adjusted returns (read here)
- How our portfolio company Figure is rebuilding capital markets on blockchain rails, on the Empire podcast (listen here)