Perpetuals plans tokenized US stocks under SEC innovation exemption

Perpetuals.com has announced plans to offer tokenized U.S. stocks through the SEC’s five-year Innovation Exemption, with its proposed launch subject to a 30-day notice period and compliance with the framework’s conditions.

Perpetuals.com Ltd, which trades on Nasdaq under the ticker PDC, said in its Oct. 14 announcement that it intends to use the Securities and Exchange Commission’s temporary exemption for Tokenized Securities Venues. According to the release, the announcement accompanies publication of a notice stating the company’s intention to rely on the framework.

In the release’s forward-looking disclosures, the company identified completion of the applicable 30-day period after publication of its venue notice as a condition of the plan. Perpetuals also listed compliance with the exemption, technical implementation, regulatory developments, market conditions and user adoption among factors that could affect the offering.

Perpetuals plans stock tokens with shareholder rights

Under the proposed offering, Perpetuals says traders would receive access to U.S. equities through blockchain-based tokens, with round-the-clock trading, near-instant settlement and fractional ownership among the intended features. The company said users would retain full dividend and voting rights.

For qualifying products, the SEC requires venues to verify that token holders receive the same rights and privileges as owners of equivalent conventional shares. The agency’s conditions also require trading to stop when the underlying stock is halted on its primary exchange, placing limits on how continuous trading can operate.

As crypto.news previously reported on Sep. 17, the regulator’s five-year trading exemption covers tokenized National Market System stocks traded through permissioned automated market makers and liquidity pools. The report noted that products offering only synthetic exposure to a stock’s price do not qualify.

In its description of the planned expansion, Perpetuals said it would build on its existing European tokenization platform. CEO Patrick Gruhn linked the U.S. initiative to the team’s previous work:

“The Perpetuals team has long been trailblazers in tokenization, and this expansion into the U.S. allows us to further utilize our platform and deep expertise.”

According to the company, its founding team developed tokenized stock products in 2021 that platforms including Binance, FTX and Bittrex offered to traders. The release also credits the team with delivering pre-IPO contracts linked to Coinbase, Airbnb and Robinhood.

SEC conditions cover issuer objections and public disclosures

In its Sept. 17 announcement, the SEC said the exemption grants qualifying venues temporary, conditional relief from the definition of an exchange under the Securities Exchange Act of 1934. The regulator also provided conditional relief from the dealer definition for certain firms supplying tokenized shares to the trading pools.

Under the agency’s framework, venues must use public, auditable smart contracts deployed on a public, permissionless blockchain. The SEC nevertheless requires permissioned access to the trading pools, alongside public disclosures about venue operations, trading activity and transactions involving affiliates.

For shares tokenized by an unaffiliated third party, the SEC also requires written notice to the underlying stock issuer and an opportunity to object before trading begins.

A Sep. 23 report on tokenized stock ownership rights detailed a separate issuer-notification requirement: the venue must wait at least 30 calendar days after the issuer receives notice. Under the order, an objection during that period prevents the venue from offering the affected tokenized stock through the exemption.

In that report, OKX US CEO Roshan Robert said tokenization should preserve the investor’s claim on the company while changing how shares trade and settle. The report identified dividends, voting rights and claims on remaining assets following liquidation among the rights covered by the SEC’s requirements.

Trading caps constrain the SEC’s five-year framework

Alongside ownership protections, the exemption limits eligible stock symbols and trading volume, according to the SEC. The agency said the relief expires five years after publication and invited public comments on possible changes.

An Oct. 2 report on Robinhood’s stock token limits described how those restrictions could affect platforms with substantial activity. Robinhood crypto executive Johann Kerbrat said the company was still reviewing the framework and that its existing stock-token volumes could reach some of the limits.

According to that report, Tier 1 products face limits of 75 symbols and 0.25% of the underlying stock’s average daily share volume during the previous month. Tier 2 products face caps of 250 symbols and 2.5% of the underlying stock’s average daily volume.

The report also distinguished Robinhood’s existing overseas products from qualifying U.S. stock tokens. Its Stock Tokens were debt securities issued by Robinhood Assets Jersey Limited, backed by corresponding shares and unavailable to U.S. users, according to the coverage. Kerbrat and CEO Vlad Tenev had said the company planned to add voting rights and in-kind redemption.

Perpetuals cites European infrastructure and commodities agreement

In its announcement, Perpetuals said its technology serves PM MTF Ltd, the operator of the European-licensed Perpetual Markets Multilateral Trading Facility. The company described that operation as compliant with MiFID II, MiCA, DORA and EMIR, and said it provides white-label infrastructure for trading partners.

Separately, the company cited a recent agreement involving more than $300 million in physical commodities as part of its tokenization business. In the linked announcement, Perpetuals reported signing an exchange agreement with Datavault AI for tokenized commodities.