Crypto▲ Bullish
GUARDD Pitches SEC on Secondary Trading for Tokenized Exempt Securities
GUARDD met with the SEC's Crypto Task Force to propose a Qualified Disclosure Publisher framework for secondary trading of tokenized exempt securities, citing $2.95B raised with less than 1% achieving liquidity.
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GUARDD, the fintech platform founded by Sherwood Neiss – a co-founder of Crowdfund Capital Advisors and one of the authors of the JOBS Act that approved online capital formation – met with the Securities and Exchange Commission's Crypto Task Force to discuss secondary trading of tokenized exempt securities.
Exempt securities include those issued under Regulation A+, Regulation Crowdfunding (Reg CF), and Regulation D. Public securities are moving toward digital or tokenized formats. Private securities are heading the same way, the company argued in its meeting.
The SEC defines a tokenized security as "a financial instrument enumerated in the definition of 'security' under the federal securities laws that is formatted as or represented by a crypto asset, where the record of ownership is maintained in whole or in part on or through one or more crypto networks."
GUARDD helps private companies raising funds under those exemptions publish standardized ongoing disclosures. The goal is to let those securities trade on Alternative Trading Systems (ATSs) while complying with state "Blue Sky" laws. Securities law in the U.S. leans heavily on disclosure.
In the meeting, GUARDD proposed using a Qualified Disclosure Publisher (QDP) to anchor uniform national secondary trading. The idea would preempt inconsistent state manual-exemption requirements while preserving state anti-fraud authority. The proposal also ties into the CLARITY Act's taxonomy if that bill becomes law.
"Regulation Crowdfunding provides a decade-long natural experiment in what happens when a primary market is built without secondary infrastructure," GUARDD wrote in a June letter to the Commission.
The letter cited CCLEAR transaction-level data showing more than $2.95 billion raised across 10,899 offerings by 9,300-plus issuers since 2016. Less than 1% of issuers have achieved meaningful secondary liquidity. The largest secondary marketplace for crowdfunded securities has quoted only 25 companies, with roughly $1.4 million in total trading volume.
One issuer spent more than $90,000 and over a year seeking state-by-state compliance just to enable lawful secondary trading for its investors, the letter said.