Implications of Tokenisation and SEC Talks for UK Founders
Updated: Oct 7
The recent discussions between Republic, a leading investment platform, and the U.S. Securities and Exchange Commission (SEC) about secondary markets and the innovation exemption have sparked significant interest across the global startup ecosystem.
For UK founders, these developments in tokenisation and regulatory engagement in the U.S. market offer valuable insights and potential opportunities. Understanding what these changes mean can help UK entrepreneurs navigate the evolving landscape of digital securities and fundraising.
What Tokenisation Means for Startups
Tokenisation refers to the process of converting ownership rights in an asset into a digital token on a blockchain. This technology allows companies to represent shares, equity, or other financial instruments as tokens that can be traded more easily and transparently.
For startups, tokenisation offers several advantages:
Access to a broader investor base: Tokens can be sold to investors worldwide without traditional intermediaries.
Improved liquidity: Tokenised assets can be traded on secondary markets, allowing investors to buy and sell shares more freely.
Lower costs: By reducing reliance on brokers and clearinghouses, tokenisation can cut transaction fees.
Faster settlement: Blockchain technology enables near-instantaneous transfer of ownership.
UK founders can leverage tokenisation to raise capital more efficiently and attract a diverse group of investors. However, this also means understanding the regulatory environment in both the UK and international markets, especially the U.S., where many tokenised securities platforms operate.
The SEC Talks and the Innovation Exemption
Republic’s engagement with the SEC centres on creating a regulatory framework that supports secondary markets for tokenised securities while protecting investors. The innovation exemption under discussion aims to provide startups and platforms with clearer guidelines on how to operate legally without facing prohibitive compliance costs.
Key points from these talks include:
Clarifying rules for secondary trading: The SEC is exploring ways to allow tokenised securities to be traded on secondary markets without requiring full registration.
Balancing innovation and investor protection: The exemption seeks to encourage new financial products while maintaining safeguards against fraud.
Potential for broader adoption: A clear regulatory path could encourage more platforms to offer tokenised securities, increasing market liquidity.
For UK founders, these developments suggest that the U.S. market may become more accessible for tokenised fundraising and trading. Understanding the SEC’s evolving stance can help UK startups plan cross-border fundraising strategies.
How UK Founders Can Prepare
To benefit from tokenisation and the emerging regulatory landscape, UK founders should consider several practical steps:
Understand UK Regulations
The Financial Conduct Authority (FCA) regulates securities and investment products in the UK. Founders must ensure their token offerings comply with FCA rules, including:
Determining if tokens qualify as securities.
Meeting disclosure and reporting requirements.
Ensuring investor protections are in place.
Monitor U.S. Regulatory Changes
Since many tokenised securities platforms operate in or target the U.S., UK founders should:
Follow updates from the SEC regarding the innovation exemption.
Engage legal counsel familiar with both UK and U.S. securities law.
Consider how secondary market access in the U.S. could impact fundraising and liquidity.
Choose the Right Platform
Selecting a platform that supports tokenised securities and complies with relevant regulations is critical. Platforms like Republic are pioneering these efforts, but founders should evaluate:
Platform reputation and regulatory compliance.
Investor reach and secondary market capabilities.
Fees and technical support for token issuance.
Educate Investors
Tokenisation is still new for many investors. Founders should provide clear information about:
How token ownership works.
Risks associated with digital securities.
How secondary trading may be conducted.
This transparency builds trust and encourages participation.
Potential Challenges for UK Founders
While tokenisation offers many benefits, UK founders must be aware of challenges:
Regulatory uncertainty: Both UK and U.S. regulations are evolving, which can create compliance risks.
Market fragmentation: Different rules across jurisdictions may complicate cross-border fundraising.
Technology adoption: Implementing blockchain-based tokenisation requires technical expertise and infrastructure.
Investor education: Limited understanding of tokenised securities can slow adoption.
Addressing these challenges requires careful planning, legal advice, and ongoing engagement with regulators and investors.
Examples of Tokenisation in Practice
Several startups have successfully used tokenisation to raise funds and improve liquidity:
Real estate platforms: Tokenising property shares allows smaller investors to participate in real estate markets.
Art and collectibles: Fractional ownership of high-value items through tokens opens new investment avenues.
Equity crowdfunding: Tokenised shares enable startups to offer equity in a more flexible and tradable form.
UK founders can explore similar models tailored to their industries and investor base.
Looking Ahead: What UK Founders Should Watch
The SEC’s discussions with Republic signal a shift toward more accommodating regulation for tokenised securities. UK founders should watch for:
Final decisions on the innovation exemption and secondary market rules.
New platforms emerging with compliant token trading capabilities.
Cross-border regulatory cooperation between the UK and U.S.
Advances in blockchain technology that simplify token issuance and management.
Staying informed and adaptable will help UK startups capitalise on these trends.
How we got here
The talks have a public paper trail. On 5 March 2026 Republic met SEC Commissioner Mark Uyeda. Four days later its founder and co-chief executive, Kendrick Nguyen, wrote to the SEC's Crypto Task Force asking for a follow-up meeting, which took place on 25 March 2026. The letter set out four topics: market reaction to the DTC no-action letter and the SEC's statement on tokenised securities, Republic's views on the proposed innovation exemption, how tokenisation is developing internationally, and how secondary markets for private securities could benefit from more staff guidance.
The policy context was moving fast. In December 2025 DTC received no-action relief to tokenise certain highly liquid assets for three years. On 12 March 2026 Commissioner Hester Peirce told the SEC's Investor Advisory Committee that staff were working on an exemption much narrower than the blanket exemption in the committee's draft recommendation. Chair Paul Atkins had earlier described the plan as one to facilitate limited trading of certain tokenised securities on novel platforms.
What happened next
The exemption did not arrive on the expected timetable. In late May 2026, Bloomberg reported that the SEC had postponed releasing the innovation exemption for tokenised stocks after stock exchange officials raised concerns about implementation. Market participants also questioned how ownership would be verified on semi-pseudonymous blockchains and whether third parties could issue tokens without a listed company's consent. No new release date was given at the time.
What it means for UK founders
Republic's own letter put private company secondaries on the agenda alongside public stocks. That is the gap the UK has already tried to fill in statute, through PISCES for intermittent trading in private company shares and the Bank of England and FCA Digital Securities Sandbox for tokenised market infrastructure. A UK founder looking for a regulated secondary route does not need to wait for Washington, although US rules will still matter for any raise that includes US investors.
The objections are also useful. Questions about verifying who owns a token and about tokens issued without the company's consent apply equally to private companies. Founders who keep a clean, company-controlled register, and who can show how any token maps to a legal share, will be better placed under whichever regime applies. Anyone planning a cross-border offering may want to take professional advice in both jurisdictions.
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Frequently asked questions
What is tokenisation for startups?
Tokenisation is the process of converting ownership rights in an asset into a digital token on a blockchain. It lets companies represent shares, equity or other financial instruments as tokens that can be traded more easily and transparently.
What have Republic and the SEC been discussing about tokenised securities?
Republic's talks with the US Securities and Exchange Commission centre on a regulatory framework that supports secondary markets for tokenised securities while protecting investors. The SEC is exploring ways to allow tokenised securities to trade on secondary markets without requiring full registration.
What is the SEC innovation exemption for tokenised securities?
The innovation exemption under discussion aims to give startups and platforms clearer guidelines on how to operate legally without prohibitive compliance costs. It seeks to encourage new financial products while keeping safeguards against fraud.
Do UK token offerings need to comply with FCA rules?
Yes. The Financial Conduct Authority regulates securities and investment products in the UK, so token offerings must comply with its rules. That includes working out whether tokens qualify as securities, meeting disclosure and reporting requirements, and putting investor protections in place.
What are the main challenges of tokenisation for UK founders?
The main challenges are regulatory uncertainty as UK and US rules evolve, market fragmentation across jurisdictions, the technical expertise needed for blockchain-based issuance, and limited investor understanding of tokenised securities.
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