Formation Securities notified the SEC on November 9 that it intends to operate a tokenized securities venue on the Solana blockchain. The firm plans to launch in early 2027 under the agency’s "Innovation Exemption," which permits conditional secondary trading of eligible stocks without full exchange registration. This move positions Formation as the first dedicated tokenized stock venue on Solana, although the notice explicitly states that the SEC has not passed upon the merits or accuracy of the disclosures. Trading will begin with tokenized shares of Exodus Movement, Forward Industries, and Galaxy Digital, accessible only to verified investors who have completed identity checks.
Mechanics and Access
The venue operates through permissioned automated market maker liquidity pools built on licensed Orca smart contracts, eliminating traditional order books. Investors can trade tokenized shares around the clock against stablecoins or non-security crypto assets, with every transaction settling atomically onchain to reduce settlement risk. While the tokens carry the same voting and dividend rights as traditional shares, a company’s transfer agent retains the official shareholder record, and each trade posts to the public ledger in real time. Formation does not hold user assets or private keys; instead, its board oversees the venue offchain while maintaining administrative control over the smart contracts, including the power to upgrade or pause them. Critical changes require multi-signature approval from staff, but trading pauses do not, creating a distinct operational hierarchy.
Access is strictly limited to wallets cleared through know-your-customer and know-your-business verification, sanctions screening, and wallet checks. Distribution channels include Alpaca, CoinList’s Passage, custodians Anchorage and BitGo, and wallet providers Solflare and Squads. Superstate and Securitize are expected to supply the tokenized shares, with Securitize CEO Carlos Domingo noting that its tokens are each backed by a real share held by its broker-dealer. Christopher Montagano, president of Formation Securities, emphasized the issuer partnership model: "Tokenized stocks will succeed only if public companies see the value in them, and we intend to build this market together with issuers." Formation, established last month from the merger of Orca and Loopscale, licenses its trading technology from Orca and cites Solana’s speed, low costs, and track record with over $5 billion in tokenized real-world assets as primary reasons for choosing the network.
| Tier | Max Listings | Volume Cap | Eligible Stocks |
|---|---|---|---|
| 1 | 75 | 0.25% | S&P 500, Russell 1000 |
| 2 | 250 | 2.5% | Other listed stocks |
The exemption caps activity strictly, limiting venues to 75 Tier 1 stocks at 0.25% of average daily volume and 250 Tier 2 stocks at 2.5%. No issuer had filed an objection as of the filing date, though Formation must notify issuers and wait out the objection window for third-party tokenized shares. This stands in contrast to the OKX-ICE venue, where 67 firms objected to their shares being tokenized. Ram Ahluwalia, founder of Lumida Wealth, questioned the utility of such platforms, stating, "I don’t know what’s being solved by tokenizing a stock on chain." While the infrastructure promises 24/7 markets and faster settlement, the reliance on issuer buy-in remains the critical variable for long-term success.
