The U.S. Securities and Exchange Commission (SEC) Crypto Task Force has taken a significant step toward understanding the potential of public blockchain technology in supporting the issuance and trading of tokenized securities.
Last week, the Task Force held separate meetings with Nasdaq, Plume Network, and Etherealize, exploring how tokenization can be integrated into existing regulatory frameworks. A recurring theme across all discussions was the concept of a regulatory sandbox , a proposal that could pave the way for innovation while ensuring investor protection.
Exploring Blockchain’s Role in Securities Tokenization
Each meeting highlighted different aspects of tokenization, from the need for updated regulatory frameworks to the importance of maintaining market integrity. However, one idea consistently emerged: the creation of a regulatory sandbox to test new approaches for tokenized securities.
“Industry participants pressed for clear taxonomy, modular rulebooks, and phased pilots,” according to meeting logs. Each called for technology-specific tweaks, but none challenged the SEC’s core investor-protection mandate.”
The Task Force staff took the materials under advisement, signaling that future rule proposals could incorporate sandbox models, dedicated trading venues, and updated transfer agent obligations.
Nasdaq Advocates for Digital Asset-Friendly Venues
In a May 21 meeting, Nasdaq executives urged the SEC to adapt existing regulations to accommodate tokenized shares, bonds, and exchange-traded funds (ETFs). They proposed the creation of a new venue called “ATS-Digital”, where firms could list digital asset investment contracts alongside commodity-style tokens.
Nasdaq also emphasized the need for a joint safe harbor with the Commodity Futures Trading Commission (CFTC) to address assets with uncertain classifications. This safe harbor would allow issuers to self-certify their classifications while adhering to light-touch disclosure standards—a concept often referred to as a regulatory sandbox.
“Tokenization should not weaken national market system protections,” Nasdaq representatives noted.
Any move toward atomic settlement must balance liquidity and operational risk. Their proposal underscores the importance of maintaining robust investor protections while embracing the efficiencies of blockchain technology.
Plume Network Pushes for On-Chain Regulatory Sandbox
On May 22, Plume Network, an Arbitrum-based decentralized finance (DeFi) startup, presented its vision for a regulatory sandbox tailored to permissionless blockchains. Plume argued that such blockchains are uniquely suited for real-world asset tokenization due to their transparency and decentralization.
The company proposed a sandbox framework covering the 1933 Securities Act and the 1934 Exchange Act, with provisions for safe harbor relief that explicitly accounts for DeFi mechanics and “credible neutrality.” Additionally, Plume sought guidance on tokenizing both U.S. and non-U.S. equities subject to the Regulation National Market System and other regulatory regimes.
“Permissionless blockchains are best suited for real-world asset tokenization,” Plume representatives stated.
A regulatory sandbox should provide tools to calibrate rules across primary offerings and on-chain secondary trading.
Plume’s proposal highlights the need for regulatory frameworks that accommodate the unique characteristics of decentralized systems.
Etherealize Calls for Transfer Agent Reforms
Etherealize, along with policy firm MetaLeX, focused on the back-office infrastructure required to support tokenized securities. They argued that legacy transfer agent regulations force issuers to maintain parallel off-chain ledgers, negating the efficiencies of blockchain technology.
Their proposal includes:
- Recognizing suitably secure blockchains as authoritative share registers.
- Exempting issuers using decentralized tokenization protocols from transfer agent registration.
- Creating a fast lane for agents specializing in tokenized securities.
Additionally, Etherealize urged the SEC to pilot smart contract equivalents for corporate actions such as dividend distribution and shareholder voting.
“Legacy transfer agent regulations negate blockchain efficiencies,” Etherealize representatives explained.
“We need updated rules that recognize the transformative potential of blockchain technology.”
Converging Themes Across Meetings
Despite differing perspectives, several common themes emerged from the discussions:
- Clear Taxonomy: Industry participants emphasized the need for precise definitions of tokenized assets and their regulatory treatment.
- Modular Rulebooks: Tailored regulatory frameworks that account for the unique characteristics of blockchain technology.
- Phased Pilots: Incremental testing of new models to ensure stability and compliance.
While each participant advocated for specific adjustments, none disputed the SEC’s core mission of protecting investors.
What’s Next for the SEC Crypto Task Force?
The SEC Crypto Task Force is now reviewing the materials and proposals submitted during these meetings. Future rule proposals could include:
- Regulatory sandbox models to test tokenized securities in controlled environments.
- Dedicated trading venues like Nasdaq’s proposed ATS-Digital platform.
- Updated transfer agent obligations to align with blockchain-based systems.
These developments highlight the SEC’s growing recognition of blockchain’s potential to transform capital markets. By balancing innovation with regulation, the Task Force aims to create a framework that supports the growth of tokenized securities while safeguarding investor interests.
Final Thoughts
The SEC Crypto Task Force’s discussions with Nasdaq, Plume Network, and Etherealize underscore the growing momentum behind securities tokenization. As the industry pushes for regulatory clarity and technological adaptation, the concept of a regulatory sandbox has emerged as a potential solution to bridge the gap between innovation and compliance.
For now, all eyes remain on the SEC as it considers these proposals and charts the future of tokenized securities.
