SEC Opens Onchain Stock Trading

Happy Friday. This is Converge, The Defiant's weekly recap of tokenization, stablecoins, and real-world assets, by Chris Storaker.

TOP NEWS THIS WEEK

• The SEC gives tokenized stocks a five-year onchain window, with volume caps and an issuer veto
• Circle's Arc goes live with BlackRock, DTCC and Visa producing its blocks

ALSO IN THIS ISSUE

• The Senate blocks CLARITY 49-50; the SEC and CFTC say they will write the rules anyway
• Aave plans a tokenized-collateral market on Avalanche; Kraken lends against xStocks
• Ondo's broker-dealer joins DTCC's Fund/SERV; S&P Global leads Kaiko's $110 million
• Kraken's permissioned Hyperliquid perps; Bitget Wallet adds a third stock-token issuer

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REGULATION / TOKENIZED EQUITIES

SEC Opens Onchain Stock Trading, Capped at 0.25% of Volume for Tier 1 Securities

• The SEC on Thursday granted five years of conditional relief from the exchange definition, letting Tokenized Securities Venues run permissioned automated market makers for tokenized NMS stock on public blockchains, with their liquidity providers exempt from the dealer definition.

The order, Release No. 34-106402, opens a narrow door. A venue may list 75 Tier 1 symbols, the S&P 500 and Russell 1000 names and certain exchange-traded products under the Limit Up-Limit Down plan, and its average daily volume in each may not exceed 0.25% of the prior month's consolidated average daily share volume, with affiliated venues counted together. Tier 2 covers the remaining NMS stocks at 250 symbols and 2.5%.

Venues must be US persons under OFAC sanctions rules, run auditable contracts on a public permissionless ledger, halt whenever the primary listing exchange halts the underlying, and publish trade data within 10 minutes of each print. It permits no primary issuance.

By our own arithmetic on August trading volumes, the Tier 1 cap works out to an average of about 83,000 shares of QQQ a day per venue, $59.5 million at Thursday's close, and about 319,000 shares of Nvidia, or $70 million. Binance's QQQB did $88.9 million on the Saturday of Labor Day weekend alone, when tokenized stocks matched a full session with exchanges shut. Robinhood's tokenized AMC turned over $232.6 million on Sept. 4; at the Tier 2 rate a venue could average about $1.4 million of it a day. The order's trade-date footnote starts each new trade date when trades must again be reported to the consolidated tape, so a weekend's volume lands on Monday's count.

• Related: the order gives issuers a veto over third-party tokens of their stock, the point AMC raised two weeks ago. Tokens must carry the stock's dividend, voting and residual-asset rights, a third-party tokenizer must give the issuer 30 days' written notice, a filed objection bars the listing, and any "tokenized linked security" offering synthetic exposure is excluded.

Robinhood's Stock Tokens are that excluded instrument: Jersey-issued debt whose prospectus settles every redemption in cash and states that holders "do not have voting rights." On Monday crypto chief Johann Kerbrat said that in-kind redemption and voting are "coming." The same prospectus lets the issuer lend the shares and waive the votes while they are out, and the issuer publishes no lending figure.

Commissioner Hester Peirce drew the another boundary: "This order is not about decentralized finance," and "an investor does not need an exemption to avail herself of permissionless smart contracts." Superstate chief executive Robert Leshner, whose registered transfer agent says it helped shape Uniswap v4's Permissioned Pools, said the order "will open the door to the first onshore, compliant, 24/7 tokenized stock trading." UNI rose 19.8%.

Our take

Onshore tokenized stock trading now requires: the transfer agent's register, the shareholder's vote and the issuer's acquiescence, so the qualifying venues are only the ones with a registered transfer agent inside the transaction: Superstate and Dinari today, Securitize with Computershare next — The offshore wrapper that produced a $1.01 billion weekend, the Jersey debt token sold to non-US persons, stays an export product.

The caps decide how much of that demand comes home: the ceiling for the most traded tokenized ETF is below one Saturday of its offshore volume, per venue, and the halt condition ties every onchain print to the primary market's clock.

The same morning, Atkins opened a roundtable on 24-hour exchange trading, said DTCC's 23-by-5 trade capture is live and an overnight price-band plan is adopted, and called tokenization a route to real-time inventory management against naked shorting. Round-the-clock US stock trading is arriving through the exchanges as much as through the tokens.

What to watch: the first venue to file its public notice under the exemption, and the first issuer to file an objection.

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STABLECOINS / INFRASTRUCTURE

Circle Launched Arc With Wall Street Producing Its Blocks

• Circle opened the public mainnet of Arc on Wednesday, where transaction fees are paid in USDC with no gas token and a fixed set of financial institutions produces the blocks.

Circle named the validators on Aug. 5 and switched them on this week: BlackRock, DTCC, Galaxy, ICE, Mastercard, MoneyGram, SBI Group, Standard Chartered, Sumitomo, Visa and Worldpay form the founding cohort alongside Circle, coming online in phases toward roughly 20 operators. Consensus is proof-of-authority over that set, with finality under a second and a base fee targeted near $0.01. Anyone can deploy contracts and transact without approval; only the vetted institutions validate.

More than 100 applications are live, with Aave V4 and Morpho anchoring credit, Uniswap, Aero and fomo trading, and Binance, Coinbase, Kraken and OKX among the exchanges connected. Tradeable assets at launch include Circle's USYC money fund, BlackRock's BUIDL tokenized by Securitize, private credit funds and cirBTC, and StableFX lists 22 currencies as active or onboarding. Circle's own disclaimer states that Arc is "operated by a permissioned validator set," "has not been reviewed or approved by the New York State Department of Financial Services or any other regulatory authority," and that "the ability to transact on Arc depends on the ability to obtain and use USDC to pay gas fees."

• Related: Circle completed a genesis mint of 10 billion ARC tokens in the United States this week, and calls the mint a technical milestone with no commitment to a public launch, while it explores a move from proof-of-authority to proof-of-stake in 2027.

The May whitepaper gives 60% of supply to ecosystem uses including token sales, 25% to Circle and 15% to a reserve, with holder votes on fees and burn logic while Circle keeps protocol development, compliance and validator membership. Circle has already sold ARC: a $222 million presale at a $3 billion fully diluted valuation in May, with a16z crypto putting in $75 million and BlackRock, Apollo Funds, ICE, ARK Invest, SBI and Standard Chartered Ventures among the buyers, several of them now validators. The presale's share of supply and its vesting are undisclosed. CRCL closed at $86.30 on Tuesday, down 11.4% on the day the Senate blocked CLARITY.

Our take

Circle owns every layer of this chain except the block producers. The fee asset is USDC, the FX layer is StableFX, the payments network is CPN, the collateral is USYC, the validator roster is Circle's to admit and remove, and a quarter of the token is Circle's. The press release calls the network open four times; the disclaimer calls it permissioned only once. Arc also gives Circle an economics line outside the USDC reserve-yield-sharing agreements.

Distribution is the true gap: Robinhood Chain's volume came through Robinhood's own app and the stock tokens the company mints; Circle has neither a brokerage nor a consumer wallet, so Arc opens through third-party wallets and launchpads that also route to every other chain.

— (@)

What to watch: what carries Arc's volume after the launch week, USDC and EURC payments or launchpad tokens (exhibit: cringeworthy attempts to stoke memecoin volume) , and whether DTCC uses its validator seat to put DTC-custodied assets on the chain.

OTHER STORIES WORTH YOUR TIME

Senate Blocks CLARITY 49-50; SEC and CFTC Say They Will Write the Rules

Cloture on the motion to proceed to H.R. 3633 fell 11 votes short on Tuesday. All 49 yes votes were Republican. Polymarket cut enactment in 2026 to 6.5% from 29.5% on Monday. On Wednesday both chairmen said they would proceed without Congress: CFTC Chairman Selig said the agency is "locked in and ready to ship its rules," and Atkins said the SEC would act "with or without legislation." The CFTC has sent 18 rules to the Federal Register since January, none on crypto market structure, and Selig is its only sitting commissioner. Thursday's exemption was the first delivery.

Aave Plans a Tokenized-Collateral Market on Avalanche With Tether's USA₮

Aave Labs said it will build a V4 RWA Hub on Avalanche letting institutions borrow USA₮, the dollar token Anchorage Digital Bank issues and Tether brands, against tokenized collateral, isolated from the main pool under V4's hub-and-spoke design. Aave's Horizon market already lends against Superstate and Centrifuge funds on Ethereum, at $262.5 million.

The same week, Kraken launched xStocks vaults that post SPYx, QQQx and NVDAx as collateral on Kamino via Solana and target 2% net yield after a 25% performance fee, with the strategy running on borrowed stablecoins and unavailable in the US.

Ondo's Broker-Dealer Joins DTCC's Fund/SERV

Oasis Pro Markets, Ondo Finance's FINRA-regulated broker-dealer, is the first tokenization company admitted to Fund/SERV, the DTCC network that processes more than 85% of US mutual fund transactions and moves more than $12 trillion a year across 1,300 clients. The membership is a standardized connection to fund companies and wealth platforms.

S&P Global Leads Kaiko to $110 Million

On Monday, S&P Global led an extension of Kaiko's Series B to $110 million, with BNP Paribas, Broadridge, Nasdaq Ventures, Royal Bank of Canada and Susquehanna joining as strategic investors, for data infrastructure covering tokenized Treasuries, funds and equities that trade outside conventional hours.

Kraken's Parent Plans Permissioned Hyperliquid Perps for US Traders

Payward said it is building permissioned HIP-3 markets on Hyperliquid for US clients: Bitnomial, its CFTC-regulated exchange and clearinghouse, would deploy, administer, clear and settle the contracts, NinjaTrader Clearing would carry the accounts, and only customers on both firms' allowlists could trade. The order book and trade record stay on Hyperliquid's public chain. Any listing needs regulatory approval.

Bitget Wallet Adds Reality's Tokenized US Stocks Alongside Ondo and xStocks

The wallet, with more than 100 million users, lists more than 1,700 rTokens on Arbitrum and Morph since Sept. 15. Reality is part of the Bitget group, so the wallet is distributing its own issuer's product. Each token is backed one-for-one by shares at Alpaca Securities with daily attestations, dividends arrive in USDT after a 30% withholding, and Reality's own site describes the tokens as unregistered securities for eligible non-US persons. Ninety of the tokens trade on weekends.

Even more this week:

• The SEC's transfer-agent proposal takes comments until Nov. 3 — the Sept. 1 overhaul that lets a master securityholder file live on a distributed ledger is the register-side counterpart to Thursday's trading exemption.

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Converge is produced by The Defiant. This briefing is for informational purposes only and does not constitute investment advice.