TIMING AND CONTENT OF PUBLIC NOTICES
Under the SEC’s Innovation Exemption, TSVs must publish a notice on their publicly available websites at least 30 calendar days before commencing operations. Importantly, the staff indicates that TSVs should publish their notices only after their operations and access standards have been established and are ready for production, rather than during preliminary development. The notices must be accurate, complete, and written in plain English, and must reflect the TSV’s anticipated operations and access standards when trading begins. TSVs must also update their public notices to keep the disclosures current.
INTERACTION WITH ISSUER OBJECTION RIGHTS
The FAQs also address the interaction of the 30-calendar-day public notice period and the separate 30-calendar-day period during which issuers may object to the trading of their stock in tokenized form by unaffiliated third parties. The staff confirms that a TSV may identify tokenized stocks in its public notice while the applicable issuer objection periods remain pending, provided that the notice indicates such pending status. If the issuer does not provide a timely notice of objection to the TSV during the 30-day objection period, the TSV may make the tokenized stock available for trading. The TSV must also amend its public notice to indicate that the objection period has lapsed and identify the tokenized stock that is available for trading.
PRACTICAL IMPLICATIONS
The FAQs reinforce the importance for public companies to monitor the TSV public notices in addition to the receipt of issuer-specific notices that TSVs must send to the company’s principal executive office, particularly because the two 30-day periods may run concurrently. In addition to the substantive guidance in the FAQs, the SEC also established a public list of entities that have notified the Commission of their intent to operate under the TSV Exemption, which provides an additional, centralized resource for public companies and other market participants to identify prospective TSV operators. Public companies should continue to maintain robust procedures to promptly identify and evaluate issuer notices and determine whether to exercise their objection rights within the prescribed period.
