10-27-2026 
|
Getting your Trinity Audio player ready...
|
TL;DR: U.S. regulators are making more room for crypto firms, but the industry is still running into resistance at almost every turn. Companies whose shares could be tokenized are backing away, while market groups argue that the SEC’s rules on which blockchain networks qualify are too vague. Meanwhile, crypto firms continue to push into regulated finance with a planned perpetuals product and a new trust bank charter, even as competitors challenge their moves in court.
Key Takeaways:
- SEC lists tokenization among its fiscal 2027 exam priorities, yet 22 of the 63 companies OKXICE targeted for tokenized trading have already opted out.
- Solana’s policy group, Hedera and SIFMA all say the SEC’s undefined wording leaves firms unsure which networks qualify for tokenized securities trading.
- Payward intends to be the first CFTC-regulated deployer on Hyperliquid’s HIP-3* markets, though the CME is challenging the CFTC’s legal basis for approving such perpetuals.
- The national trust charter lets Ripple custody roughly $2.6 billion in RLUSD reserves itself, but it has drawn a lawsuit from community banks that say the OCC is overstepping.
America’s securities regulator says tokenized shares are a 2027 priority, but the first company looking to offer them keeps getting rejected by public companies.
On October 23, the Securities and Exchange Commission (SEC) released its fiscal year 2027 examination priorities, laying out the key areas the regulator believes will “present heightened risks to investors or market integrity” over the next 12 months.
Notably, the document makes no mention whatsoever of digital assets or cryptocurrencies, the second year in a row that the SEC has declined to spotlight crypto risks, apparently because these blockchain products are now safe as houses. The SEC cautioned that the list of priorities isn’t “exhaustive,” pledging to continue to monitor “the full spectrum of registrant activities” for signs a fiscal apocalypse is nigh.
Among the potential tripwires that are cited in the document are the “risks associated with evolving market infrastructure,” including “tokenization of securities” and the “extended trading hours” that come from investors being able to trade blockchain-based versions of a public company’s shares on a 24/7 basis.
There are currently more immediate risks to the SEC’s tokenization drive, like the fact that the first company to apply for the SEC’s new ‘tokenized securities venue’ (TSV) category is having trouble convincing publicly traded companies that having their shares tokenized by third parties is a good idea.
OKXICE, the joint venture of digital asset exchange OKX and Intercontinental Exchange Holdings (NYSE: ICE), the parent company of the New York Stock Exchange (NYSE), originally submitted a list of 63 firms whose shares it wanted to tokenize. Only one of these firms chose to use its SEC-mandated ‘opt out’ option ahead of time, but the number of objecting firms grew to nine on October 15, then grew again to 16 firms by October 19.
On October 23, OKXICE updated its filings to show another six firms opting out of its tokenization scheme. These include bankers Wells Fargo (NYSE: WFC), pharma/biotech Moderna (NASDAQ: MRNA), technology giant Cisco Systems (NASDAQ: CSCO), semiconductor makers Arm Holdings (NASDAQ: ARM) and Marvell Technology (NASDAQ: MRVL), plus financial software firm Intuit (NASDAQ: INTU).
As usual, OKXICE offered no explanations behind the rejections. Some publicly traded firms have suggested they’re skittish about participating in this experiment given the uncertainties, while others claim they can’t see a clear benefit for their shareholders.
But the rejection count now stands at 22, more than one-third of the original list, and there’s still over a week to go before the stipulated 30-day window for companies to object slams shut.
Ironically, the SEC’s ‘move fast and deregulate things’ approach may be contributing to corporate skittishness re tokenized trading. With no clear SEC mechanism for a company to withdraw permission once its tokenized stock is trading, companies appear uneager to be the first to cannonball into this pool. At least, not until they see how it’s playing out.
Two other would-be TSVs have filed their own applications with the SEC, although nothing is known at this point as to the names of the stocks they seek to tokenize.
Who gives permission?
Meanwhile, blockchain representatives are pressing the SEC to clarify its rules regarding the networks on which tokenized shares can be traded. The SEC’s guidance says smart contracts involved in tokenized trading must be “auditable, public and deployed on a public, permissionless distributed ledger.” But this description went undefined, prompting some network reps to push the SEC on which networks might qualify.
On October 22, the Solana Policy Institute (SPI) sent the SEC a letter noting that while the regulator says ‘permissionless’ means anyone can read/write to the network without authorization, “it does not address who controls whether a submitted transaction is included, how it is ordered, who can validate or finalize blocks, and who can change the rules that govern those functions.”
The letter goes on to say that the SEC won’t achieve its tokenization goals “via a ledger where one party can delay, reorder, or entirely exclude TSV transactions, or control whether new validators can participate in network activities.” The SPI urges the SEC to clarify its language ASAP because “market participants are already developing TSVs and making foundational decisions about the blockchain networks on which they will operate.”
The SPI further urges the SEC to adopt the definition of ‘distributed ledger control person’ contained in Sections 10104 and 10301 of the most recent draft of the CLARITY Act, the market structure legislation that went down to defeat in the Senate last month.
A different take comes in a letter by representatives of decentralized network Hedera, who write that the SEC’s existing language “implies that for a network to be public, it must be permissionless.” This could “confuse entities evaluating networks by conflating language used to describe using the network (public vs. private) with language typically used to describe running a network (permissionless vs. permissioned).”
Hedera suggests an alternate language that specifies that “smart contracts used by a TSV may be deployed on public distributed ledgers without delineating between permissionless and permissioned networks.”
Other stakeholders have similarly urged the SEC to clarify its intentions, including the Wall Street advocates at the Securities Industry and Financial Markets Association (SIFMA). SIFMA has long viewed tokenization of securities by decentralized finance (DeFi) firms with suspicion, particularly if DeFi platforms aren’t subject to the same rules as their tradfi counterparts.
SIFMA’s letter addresses a number of issues, but its ‘public, permissionless and auditable’ queries include asking whether “the smart contracts must be universally accessible, like via a public source code repository, or can the source code be reserved for users of the tokenization service?”
Hyperliquid-Kraken perpetual futures are coming
On October 26, the Hyperliquid decentralized exchange took another small step toward offering a ‘fully legal and compliant’ version of its operations in the U.S. with a little help from Bitnomial, the derivatives and designated contract market (DCM) platform registered with the Commodity Futures Trading Commission (CFTC).
Hyperliquid tweeted that Payward Inc, the parent company of Bitnomial and the Kraken exchange, has “announced its intention to be the first CFTC-regulated deployer on HIP-3* markets.” HIP-3 markets are permissionless builder-deployed perpetual futures in which third parties utilize Hyperliquid’s core execution engine HyperCore. HIP-3* add the ability to restrict access via an ‘allow list’ to better conform to regulatory requirements in different markets.
Assuming the CFTC is cool (and given Chairman Michael Selig’s ‘let ‘em cook’ approach to crypto regulations, he’s ice cold), Bitnomial will serve as the HIP-3* deployer, “creating, owning, and administering the markets and clearing and settling the contracts,” while Payward’s CFTC-registered futures commission merchant (FCM) NinjaTrader Clearing will carry client accounts.
Hyperliquid is infamously averse to performing know your customer (KYC) checks on its clients, which hasn’t earned it many friends among financial services regulators. Presumably, Payward has plans in place to ensure it (and the CFTC) knows who might be trading perps via this new channel.
Hyperliquid and Payward were reported to be talking about a tie-up this summer, and Payward confirmed these plans last month. That confirmation appears to have slipped under everyone’s radar, but Hyperliquid’s tweet seems to have gotten everyone’s attention.
The CFTC’s eagerness to expand the list of crypto companies authorized to offer perpetual futures to U.S. customers has been challenged in court by the Chicago Mercantile Exchange (CME), which has rubbished the CFTC’s argument that the perps in question are ‘swaps’ rather than futures.
Ripple wins bank charter
Ripple Labs, issuer of the XRP token, has received final approval for its national trust bank charter from the Treasury Department’s Office of the Comptroller of the Currency (OCC). Ripple’s application for its Ripple National Trust Bank (RNTB) received conditional OCC approval last December.
As a trust charter, RNTB can’t issue loans or take retail customer deposits, but it will allow Ripple to bring custody of the ~$2.6 billion in reserve assets backing its RLUSD stablecoin in-house. RLUSD’s reserves are currently custodied by BNY Mellon (NASDAQ: BK), but Ripple, like other U.S.-based stablecoin issuers who have pursued OCC trust charters, is looking to not only cut out this middleman but also offer custodial services to other enterprises.
RLUSD has had a good year, as its current market cap has doubled since January. RLUSD launched in December 2024 but took nearly a full year for its cap to exceed $1 billion. RLUSD currently ranks ninth on the list of the largest dollar-backed stablecoins.
Under Trump 2.0, the OCC has been doling out bank charters to crypto operators with a speed that has alarmed traditional banking operators. The OCC even gave conditional approval to Catena Labs’ plan for “a national trust bank built for AI agents.”
This month, Tradfi put its foot down, with the Independent Community Bankers of America (ICBA) filing suit against the OCC and its chief, Jonathan Gould, for “authorizing novel entities primarily dealing in cryptocurrencies to enter the banking system without being subject to the same rigorous regulatory framework or safeguards as community banks.”
The ICBA believes that the OCC has exceeded its statutory authority by eliminating state-level oversight, including consumer protection laws, while also creating an unlevel playing field that disadvantages companies operating under traditional bank charter restrictions.
FAQs:
What is a tokenized securities venue (TSV)?
TSV is a new SEC category for platforms that trade blockchain-based versions of public company shares, potentially around the clock. OKXICE, a joint venture of OKX and Intercontinental Exchange, is the first to apply, and two other applicants have also filed.
Why are companies opting out of OKXICE’s tokenization plan?
OKXICE gave no reasons, but some firms cite uncertainty about the experiment, while others see no clear benefit for shareholders. The lack of an SEC mechanism to withdraw permission once tokenized shares are trading may also be making companies reluctant to go first.
What does the SEC mean by ‘public, permissionless’ blockchains, and why is it controversial?
The SEC says smart contracts must be auditable, public and deployed on a public, permissionless distributed ledger, but it hasn’t defined this fully. Stakeholders disagree on what matters: Solana’s group focuses on who controls transaction inclusion and validation, Hedera says the terms are being conflated, and SIFMA asks about source code accessibility.
How would the Hyperliquid-Payward perpetual futures arrangement work?
Bitnomial would serve as the HIP-3* deployer, creating, owning, and administering the markets and clearing and settling contracts. Payward’s NinjaTrader Clearing would carry client accounts, and allow lists would restrict access to meet regulatory requirements. CFTC approval is assumed rather than confirmed, and the CME is contesting the CFTC’s legal reasoning in court.
What does Ripple’s trust charter allow it to do, and why are banks upset?
The charter lets Ripple custody its RLUSD stablecoin reserves itself and offer custody services to other enterprises, though not lend or take retail deposits. Community banks, through the ICBA lawsuit, argue the OCC is letting crypto-focused firms into the banking system without the same regulatory safeguards, and has overstepped its authority by sidelining state-level oversight.
Watch | Tokenization on public blockchain: Transforming RWAs and finance
