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SEC TOKENIZED SECURITIES GUIDANCE

OTCM PROTOCOL

Strategic Impact & Compliance Analysis

Groovy forCompany, Inc. dba OTCM Protocol, Inc.Protocol

Version 2.0 — ·  Updated for SEC–CFTC Release No. 33-11412 (March 17, 2026)

Internal

/

📄Investor DocumentRelations Information

 ·  CIK: 1499275  ·  March 2026

 

Field

Value

Original Statement Date

January 28, 2026 (Joint Staff Statement)Statement on Tokenized Securities)

Superseding Release Date

March 17, 2026 (Release Nos. 33-11412; 34-105020)

Analysis Updated

March 19, 2026

Document Type

Compliance Gap Analysis — Version 2.0

Classification

Internal / Investor Relations

Version

2.0

Supersedes

Version 1.1 (January 29, 2026)

Prepared by

OTCM Protocol Strategic Analysis Team

⚠️ 

Version 2.0 Update Notice:Notice

 This document supersedes Version 1.1. The January 28, 2026 Joint Staff Statement on Tokenized Securities, which formed the basis of Version 1.1, has been substantially expanded and elevated in legal authority by Release Nos. 33-11412 and 34-105020, jointly issued by the SEC and CFTC on March 17, 2026. 

Version 2.0 reflects all material changes arising from that release, the March 18, 2026 Nasdaq tokenization approval (Release No. 34-105047), and the forthcoming SEC innovation exemption rulemaking. Sections marked 🔄 have been materially revised from Version 1.1.

 

📌

EXECUTIVE

EXEC SUMMARY Executive Summary

 

On March 17, 2026, the Securities and Exchange Commission and the Commodity Futures Trading Commission jointly issued Release Nos. 33-11412 and 34-105020 — the most legally significant and comprehensive federal guidance on digital asset classification in U.S. regulatory history. Unlike the January 28, 2026 Joint Staff Statement (which carried Staff-level persuasive weight), Release No. 33-11412 is a Final Rule and Interpretation carrying the full legal weight of an official SEC and CFTC interpretation under the Securities Act of 1933 and the Securities Exchange Act of 1934. It is effective upon Federal Register publication.

The release supersedes all prior Staff statements on the topics it addresses. Its impact on OTCM Protocol is profound and, on balance, highly favorable — but requires five specific updates to this document and to the Company'Company’s strategic positioning.

 

✅

KEY

Key FINDINGSFindings — VERSIONVersion 2.0

 

Finding

Impact

🏆✅ ST22 SecurityDigital TokensSecurities are unambiguously

DigitalCategory Securities

5 — the only category under SEC jurisdiction

Confirms core architecture; no change needed

🏆✅ OTCM'OTCM’s Category 1 Model B architecture is now backed by

binding interpretation

,interpretation, not Staff guidance

Stronger legal footing than Version 1.1

🏆✅ The OTCM utility/governance token can now be classified as a

Digital Commodity or Digital Collectible

Tool — not a security — without the Howey Shield argument

Howey Shield analysis for utility token now obsolete

obsolete

🔄 The

five-category taxonomy

replaces the two-category framework described in Version 1.1

Part 1 requires full rewrite

⚠️ The Nasdaq tokenization approval (Release No. 34-105047) does

not

NOT create a compliant trading path for CEDEX

ATS question remains open and urgent

🆕 An SEC

innovation exemption

rulemaking is imminent

New strategic opportunity for CEDEX

 

🔄

PART 1:1 THE UPDATEDThe Updated SEC–CFTC REGULATORYRegulatory FRAMEWORKFramework

 

This section supersedes Part 1 of Version 1.1 in its entirety.

📚

 

Definition of Digital Securities (Unchanged)

Release No. 33-11412 reaffirms the definition established in the January 28 Joint Staff Statement:

"“A tokenized security is a financial instrument enumerated in the definition of 'security'‘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."”

⚖️

 

Fundamental Regulatory Principle (Unchanged, Now Binding)

The technology-neutral principle — that tokenization changes market infrastructure but not regulatory obligations — is now binding interpretation, not Staff guidance:

"“The format in which a security is issued or the methods by which holders are recorded (on-chain vs. off-chain) does not affect application of the federal securities laws."”

This technology-neutral principle is now binding interpretation, not Staff guidance, under Release No. 33-11412.

 

🔄 The Five-Category Taxonomy:Taxonomy — REPLACES the Two-Category Framework

Release No. 33-11412 establishes five formal categories of crypto assets.assets, This replacesreplacing the two-category (Category 1 / Category 2) framework described in Version 1.1. The prior two-category taxonomy addressed only tokenized securities and their structures — it did not classify other digital assets.securities. The five-category taxonomy addresses the full digital asset universe and carries binding legal force.

🟢 Category 1: Digital Commodities — NOT Securities

Assets intrinsically linked to and deriving value from the programmatic operation of a functional crypto system. Offers and sales of Digital Commodities do not require SEC registration. Protocol mining, protocol staking, and wrapping of Digital Commodities are not securities transactions.

Named examples: Bitcoin, Ethereum, Solana, XRP, Cardano, Avalanche, Polkadot, Chainlink, Dogecoin, Shiba Inu (and 6 additional tokens explicitly named in the release).

Category

Name

Securities?

OTCM Relevance:Protocol Relevance

1

Digital TheCommodities

No — CFTC jurisdiction

OTCM utility/governance token —may which derives value from protocol operation rather than from an investment contract with OTCM Protocol, Inc.qualify — should now be analyzed for Digital Commodity classification. Seesee Part 3,3 Item 1 for full analysis.

🟢 Category 2:

2

Digital Collectibles

No

Future —NFT-based NOTissuances Securitiesonly;

Assets designed for collection or use, including NFTs representing artwork, music, trading cards, videos, in-game items, or internet meme references. Not securities. Not subject to SEC registration.

OTCM Relevance: Not directlynot applicable to ST22 Security Tokens or the OTCM utility token, but provides context for any NFT-based issuance OTCM may consider in future roadmap phases.

🟢 Category 3:

3

Digital Tools — NOT Securities

Assets functioning as memberships, tickets, credentials, title instruments, or identity badges. Not securities under the investment contract test.

OTCM Relevance: Potentially applicable to access credentials in the OTCM Issuers Portal or future protocol governance tools. Not applicable to ST22 Security Tokens.

🟢 Category 4: Payment Stablecoins — NOT Securities

Stablecoins meeting the requirements of the GENIUS Act as payment stablecoins issued by a permitted payment stablecoin issuer. Explicitly outside securities law jurisdiction; under GENIUS Act regulatory framework.No

OTCM Relevance: DirectlyPotentially applicable to OTCM Protocol'sPortal cross-borderaccess liquiditycredentials

4

Payment strategyStablecoins

No and— GENIUS Act integration (see separate Cross-Border Liquidity Framework document).

Confirms that GENIUS Act-compliantAct stablecoin settlement for ST22 trades is not a securities transaction.transaction

5

Digital Securities

Yes — SEC jurisdiction

ST22 Digital Securities are unambiguously Category 5

 

🔴

Category 5: Digital Securities — SECURITIESOTCM (SECProtocol’s Jurisdiction)

Confirmed Home

FinancialST22 instrumentsDigital enumerated in the statutory definition of "security" thatSecurities are formattedunambiguously asCategory or5. representedEach byST22 token represents a cryptoSeries asset.M ThesePreferred areShare securities.— Fulla traditional equity security under Securities Act Section 2(a)(1). This is OTCM Protocol’s confirmed regulatory home. All existing federal securities law applies.obligations Thisapply, and the Category 1 Model B architecture is specifically designed to satisfy them.the only category under SEC jurisdiction.

As SEC Chair Paul Atkins stated at the March 17 DC Blockchain Summit: "“This distinction returns the Commission to its core mission — and statutory authority — of protecting investors involved in securities transactions. We are not the Securities and Everything Commission, anymore."”

OTCM Relevance: ST22 Security Tokens are unambiguously Digital Securities. Each ST22 Token represents a Series M Preferred Share — a traditional equity security under Securities Act Section 2(a)(1). This is OTCM Protocol's confirmed regulatory home. All existing federal securities law obligations apply, and OTCM Protocol's Category 1 Model B architecture is specifically designed to satisfy them.

🔄🆕 Investment Contract Termination — New Framework

Release No. 33-11412 introduces an important new concept absent from the January 28 Statement: investment contract status can terminate. A non-security crypto asset that was initially distributed under an investment contract ceases to be subject to that investment contract when:

  1. The(1) the issuer fulfills its representations and promises (e.g., launches a functional network),; or
  2. The (2) the issuer demonstrably fails to fulfill those representations
representations.

OTCM Relevance: ThisDirectly is directly relevantapplicable to the OTCM utility/governance token. If the OTCM token was initially distributed under circumstances that could constitute an investment contract, theThe Company should document the point at which the protocol became functional and that investment contract status terminated — eliminating ongoing securities obligations for the utility token.

 

🆕 March 11, 2026: SEC–CFTC Joint Harmonization Initiative

Six days before Release No. 33-11412, on March 11, 2026, the SEC and CFTC signed a Memorandum of Understanding establishing a Joint Harmonization Initiative co-led by Robert Teply (SEC) and Meghan Tente (CFTC). This initiative coordinates oversight across policymaking, examination, and enforcement, and is intended to reduce frictions for dually regulated entities. OTCM Protocol should monitor this initiative for implications for CEDEX'CEDEX’s regulatory path.

 

📊

PART 2:2  OTCM PROTOCOLProtocol COMPLIANCECompliance STATUSStatus

🔄— Updated for Release No. 33-11412

 

The Series M / ST22 Digital Securities architecture compliance analysis from Version 1.1 remains valid. What changes is the legal authority level: all prior "“Staff guidance alignment"alignment” characterizations are upgraded to "“binding interpretive release alignment."”

 

✅ Core Architecture Compliance Status — UPGRADEDUpgraded TOto BINDINGBinding

 

SEC Requirement

OTCM Protocol Implementation

Version 1.V1.1 Status

Version 2.V2.0 Status

Issuer authorization

Board resolution required

✅ Staff guidance

✅Staff guidance

Binding interpretation

Shareholder register integration

Certificate of Designation + ESTEmpire master file

✅ Staff guidance

✅Staff guidance

Binding interpretation

SEC-registered custody

Empire Stock Transfer (§17A)

✅ Staff guidance

✅Staff guidance

Binding interpretation

True equity backing

1:1 Series M shares, irrevocable custody

✅ Staff guidance

✅Staff guidance

Binding interpretation

Token standard

SPL Token-2022 with 42 Transfer Hooks

✅ Staff guidance

✅Staff guidance

Binding interpretation

Digital Securities classification

ST22 = Category 5 Digital Securities

✅ Staff guidance

✅Staff guidance

Binding interpretation

Category 1 Model B architecture

Solana as notification layer; ESTEmpire as master file

✅ Staff guidance

✅Staff guidance

Binding interpretation

CUSIP assignment

Series M shares receive official CUSIP

✅ Staff guidance

✅Staff guidance

Binding interpretation

Protective conversion triggers

Auto-conversion on specified adverse events

✅ Staff guidance

✅Staff guidance

Binding interpretation

Tripartite legal structure

Issuer + OTCM Protocol + ESTEmpire agreement

✅ Staff guidance

✅Staff guidance

Binding interpretation

 

🔔 Critical Differentiator: Protective Conversion Triggers (Unchanged — Still Best Practice)

Trigger Event

Protection

💸 Bankruptcy filing (any chapter)

Auto-conversion to common stock

⚖️ SEC enforcement action against the company

Auto-conversion to common stock

👮 Criminal indictment or conviction of officers

Auto-conversion to common stock

📋 Loss of Transfer Agent services

Auto-conversion to common stock

📜 Material breach of token holder rights

Auto-conversion to common stock

These triggers directly address the counterparty and bankruptcy risk concerns that Release No. 33-11412 continues to flag for Category 2 (third-party) tokenization models. They remain a significant competitive differentiator.differentiator and are now backed by binding release authority.

 

⚠️

Trigger Event

Investor Protection

Bankruptcy filing (any chapter)

Auto-conversion to common stock

SEC enforcement action against the company

Auto-conversion to common stock

Criminal indictment or conviction of officers

Auto-conversion to common stock

Loss of Empire Stock Transfer services

Auto-conversion to common stock

Material breach of token holder rights

Auto-conversion to common stock

 

PART 3:3 REQUIRED COMPLIANCERequired ADJUSTMENTSCompliance Adjustments — VERSIONVersion 2.0

🔄

 Updated,

Expanded,

1. and Reprioritized

🔄 1️⃣ Token Classification Strategy — SUBSTANTIALLY RESOLVED by Release No. 33-11412

 

Priority: 🔴 HIGH → 🟡 MEDIUM (for ST22)ST22 Digital Securities) · 🟢 LOW (for utility token)

 

ST22 SecurityDigital Tokens

Securities

Version 1.1 Issue: The "“Howey Shield"Shield” framework was the #1 red flag — positioning ST22 tokens as commodities/collectibles rather than securities.

Version 2.0 Status: RESOLVED.RESOLVED

 Release No. 33-11412 eliminates any strategic value in the Howey Shield argument for ST22 tokens.Digital Securities. ST22 tokens are unambiguously Category 5 Digital Securities.Securities. This is not a liability — it is OTCM Protocol'Protocol’s competitive moat. 

The SEC has confirmed that only Category 5 assets fall under its jurisdiction, and that Category 1 Model B issuer-sponsored tokenization is the compliant structure. OTCM Protocol should lean into this classification, not away from it.

 

ActionActions Required:

  • •      ❌  Permanently retire all "“Howey Shield"Shield” language for ST22 tokensDigital Securities in all documents

  • •      ✅  Replace with explicit "“Category 5 Digital Securities under Release No. 33-11412"11412” classification

  • •      ✅  Update Whitepaper,Whitepaper V7.0, PPM, Issuer Agreements, and all marketing materials accordingly

 

OTCM Utility / Governance Token

Version 2.0 New Analysis: The five-category taxonomy potentially reclassifies the OTCM utility/governance token entirely outside securities law. If the OTCM token functions as a governance credential and protocol access tool, it may qualify as a Category 3 Digital Tool (not a security). If it operates as a network-native asset with value derived from protocol operation, it may qualify as a Category 1 Digital Commodity (not a security). The investment contract termination framework may also be applicable if the token was distributed under early-stage investment contract circumstances that have since concluded.applicable.

Action•      Required:

  • 🔧  Engage securities counsel to formally classify the OTCM utility/governance token under the five-category taxonomy

  • •      🔧  Document investment contract termination analysis if applicable

  • •      🔧  Update all disclosures to reflect the distinction between ST22 Digital Securities (Category 5) and OTCM utility token (Category 1, 2, or 3 TBD)

 

⚠️

2️⃣

2.  Disclosure Requirements — UNCHANGED FROM VERSION 1.1

Priority: 🟡 MEDIUM

Priority: MEDIUM · Release No. 33-11412 does not change the disclosure obligations for Digital Securities issuers. Tokenized securities require the same disclosures as traditional securities. The Version 1.1 action items remain in force:force.

 

Issuer Type

Required Action

📁 SEC-reporting issuers

Token offering documents must reference existing 10-K, 10-Q, 8-K filings

📁 Non-reporting issuers

Standardized disclosure package: material business information, risk factors, financials, management disclosure, use of proceeds

📁 Ongoing disclosure

Protocol for material event updates to ST22 Digital Securities token holders

 

🔴

3️⃣

3.  Trading Venue Compliance — UNCHANGED AND NOW MORE URGENT

 

Priority: 🔴 HIGH (unchanged from Version 1.1)

 

Version 2.0 Update:Update — Nasdaq Approval Analysis

 The March 18, 2026 Nasdaq tokenization approval (SEC Release No. 34-105047) requires specific analysis. The Nasdaq approval applies exclusively to DTC Eligible Securities — securities with functioning clearing and settlement infrastructure within the Depository Trust Company. By definition, this framework does not extend to abandoned OTC securities with no DTC clearing, no market maker, and no broker-dealer support. 

The Nasdaq approval does not create a compliant trading path for CEDEX or for ST22 SecurityDigital Tokens.

Securities.

CEDEX remains on its own regulatory path. OTCM Protocol'Protocol’s consolidated no-action letter (filed March 30, 2026) requesting Staff confirmation that CEDEX does not require ATS registration is the correct and necessary approach.

The

 Nasdaq approval confirms that the regulatory infrastructure for tokenized securities now exists — but that OTCM Protocol must establish its own approved pathway, as Nasdaq did through its separate rule filing process.

Option

Description

Version 2.0 Assessment

🏛️

Consolidated No-Action Letter

Filed March 30, 2026 — requesting CEDEX operating confirmation

✅ Active — await Staff response by April 30, 2026

🏛️

ATS Registration

Register CEDEX as an Alternative Trading System

🔄 Evaluate based on no-action response

🆕

Innovation Exemption Sandbox

Apply for SEC'SEC’s forthcoming innovation exemption rulemaking

🆕 See Item 6 below

📋

Exemption Strategy

Maintain Reg D 506(c) Exemption

Maintain accredited investor limitation while venues are evaluated

✅ Currently operative

 

⚠️

4️⃣

4.  Broker-Dealer Requirements — UNCHANGED FROM VERSION 1.1

Priority: 🟡 MEDIUM

Priority: MEDIUM · No material change from Version 1.1. Release No. 33-11412 does not address broker-dealer registration requirements for Digital Securities issuers. The three-option framework remains:

remains
  • 💎operative. Determine if OTCM Protocol itself requires broker-dealer registration
  • 💎 Partner with a registered broker-dealer for token distributions
  • 💎 Rely onThe Reg D Rule 506(c) accredited investor exemption (currently operative)

Current Strength: The Reg D 506(c) approach for ST22 tokenDigital Securities distributions remains sound and fully consistent with Release No. 33-11412. The Company's 42 Transfer Hook controls enforce accreditation verification programmatically on every transfer.

 

💡

5️⃣

5.  Shareholder Register Integration — UNCHANGED FROM VERSION 1.1

Priority: 🟢 LOW

Priority: LOW · No material change. Enhancement recommendations from Version 1.1 remain valid:valid.

 

Enhancement

Purpose

📋 Document blockchain token records as official book entries for Series M

Legal clarity on authoritative record

📋 Establish formal reconciliation procedures between on-chain and off-chain records

Audit trail completeness

📋 Real-time oracle verification visible to regulators (~400ms ESTEmpire attestation cadence)

Transparency and regulatory confidence

📋 Ensure ESTEmpire Stock Transfer systems can generate shareholder lists from blockchain data

Compliance reporting readiness

 

🆕

6️⃣

6.  Innovation Exemption — NEW SECTION (Not in Version 1.1)

 

Priority: 🟡 MEDIUM — Strategic Opportunity

 

Release No. 33-11412 is explicitly described by SEC Chair Atkins as "“a first step rather than a final answer."” Formal rulemaking is imminent. Of particular strategic relevance to OTCM Protocol is the innovation exemption — a forthcoming SEC rulemaking (expected April–May 2026) that would allow companies to test novel business models under principles-based safeguards rather than full compliance with existing rules.

 

What the Innovation Exemption Could Provide:

Provide

  • 🏗️

    •      Operate CEDEX as a trading venue without full ATS registration during a defined sandbox period

  • 📋

    •      Submit simplified periodic reports to the SEC in lieu of full ATS disclosure obligations

  • ⏳

    •      Test CEDEX'CEDEX’s compliance architecture under regulatory supervision, building the evidentiary record for permanent clearance

  • 🔄

    •      Reduce regulatory uncertainty while the consolidated no-action letter is pending

 

Why OTCM Protocol May Be a Strong Candidate:

Candidate

  • •      ✅  OTCM Protocol'Protocol’s compliance42 architectureTransfer Hook controls already exceedsexceed the safeguards any innovation exemption sandbox would require — 42 Transfer Hook controls enforced atomically on every transaction

  •  inside the Solana runtime

    •      ✅  All ST22 Digital Securities offerings are limited to Empire-verified accredited investors — the sandbox'sandbox’s investor participation limit is already satisfied

  • •      ✅  CEDEX is non-custodial — OTCM Protocol holds no user funds, reducing the regulatory risk profile

    that

    •      sandbox limitations are designed to address

  • ✅  On-chain settlement provides regulators with real-time, immutable transaction visibility superior to the reporting obligations sandbox participants would otherwise need to satisfy

Action 

Actions Required:

  • •      🔧  Monitor SEC rulemaking publication (expected April–May 2026 per Chair Atkins remarks)

  • •      🔧  Engage securities counsel to evaluate innovation exemption application eligibility immediately upon rule publication

  • •      🔧  Prepare innovation exemption application in parallel with no-action letter response process

  • •      🔧  Position CEDEX'CEDEX’s 42-control Transfer Hook architecture as the model for "“principles-based safeguards"safeguards” the sandbox framework envisions

 

🔄

7️⃣

7.  Documentation Updates — REVISED FROM VERSION 1.1

 

Priority: 🔴 HIGH (for regulatory document updates)documents) · 🟡 MEDIUM (formarketing)

marketing)

 

Document

Required Update

Version 2.0 ChangePriority

📄

Whitepaper (V6.1)V7.0

Remove all Howey Shield language for ST22; update taxonomy from 2-category to 5-category; cite Release 33-11412 throughout

🔴High — Urgent

Urgent

📄PPM V6.1

PPM

Update token classification; add five-category taxonomy; remove "Howey Shield"Shield for ST22; add utility token classification analysis

🔴High — Urgent

Urgent

📄

No-Action Letter

Already filedFiled March 30, 2026 — references Release 33-11412 and January Statement correctly

✅ CurrentComplete

📄

Issuer Agreements

Add explicit Digital Securities classification acknowledgment; reference Release 33-11412

🟡 Medium

📄

Risk Disclosures

Update to reflect five-category taxonomy; remove any "“not a security"security” language for ST22 Digital Securities

🔴High — Urgent

Urgent

📄

Marketing Materials

Replace all Howey Shield references; emphasize Category 5 Digital Securities compliance

🔴High — Urgent

Urgent

📄

Technical Specs

Confirm Transfer Hook documentation reflects Release 33-11412 Digital Securities requirements

🟡 Medium

📄

This Analysis

Version 2.0 — complete

✅ DoneComplete

 

🏆

PART 4:4 COMPETITIVE ADVANTAGESCompetitive Advantages — VERSIONVersion 2.0

🔄 Updated for the Five-Category Taxonomy

 

The five-category taxonomy dramatically strengthens OTCM Protocol'Protocol’s competitive position relative to Version 1.1.position. The new framework does two things simultaneously: itsimultaneously confirms OTCM Protocol'Protocol’s architecture as the compliant model for Digital Securities,Securities and it draws a sharp regulatory line around all competing models.

 

🚫 Third-Party Models — Now Even More Disfavored

Release No. 33-11412 reinforces and expands upon the January 28 Statement's warnings:

  • 💎•      Synthetic Equity Products (e.g., third-party tokenized stocks without issuer authorization): Now explicitly Category 2 non-compliant — security-based swaps that cannot trade off-exchange to retail investors

  • 💎•      Custodial Receipt Models (ADR-type tokens without direct issuer involvement): Investors face counterparty risk, bankruptcy risk, and no direct issuer relationship — all conditions the SEC'SEC’s taxonomy is designed to flag

  • 💎•      Unclassified Tokens Claiming Non-Security Status: The five-category taxonomy requires each token to fit one of five defined categories.Status: Tokens that do not clearly fit one of the five categories are presumptively investment contracts under Howey — the worst possible regulatory outcome

 

💪 OTCM Protocol Competitive Advantages — Version 2.0

 

Advantage

Version 1.1 Basis

Version 2.0 Upgrade

🏰

Regulatory Moat

Staff guidance alignment

Binding interpretive release

alignment

🚀

First-Mover Position

Category 1 architecture pre-built

Only OTC platform with architecture conforming to

all five categories

correctly classified

🛡️

Risk Mitigation

Protective conversion triggers address counterparty risk

Conversion triggers now specifically address risks flagged in

binding

Release 33-11412

🏦

Institutional Appeal

Clear framework enables institutional participation

Five-category taxonomy

gives institutional investors a clear compliance map

🆕

CFTC Coordination

N/A

Joint SEC–CFTC harmonization means

dual regulatory clarity

— utility token may fall under CFTC, not SEC

⚙️

Innovation Exemption Positioning

N/A

42 Transfer HooksHook controls =

best-in-class safeguards

for sandbox eligibility

 

📢 Strategic Messaging — Version 2.0

 

❌ Version 1.1 Message (Retire)

✅ Version 2.0 Message (Adopt)

"“Our ST22 tokens aren'aren’t securities because of the Howey Shield"Shield”

(RetireRETIRE entirely)ENTIRELY — this positioning is obsolete and counterproductive

"“Our ST22 tokens are SEC-compliant issuer-authorized tokenized securities"securities-compliant”

✅Our RetainST22 andDigital strengthenSecurities are Category 5 Digital Securities under binding Release No. 33-11412 — the only category under SEC jurisdiction

"“We align with the January 28 Staff Statement"Statement”

➡️ "We align with

binding

Release No. 33-11412 — the only comprehensive federal crypto asset classification with full legal authority"authority

"“Our OTCM utility token is protected by the Howey Shield"Shield”

➡️ "Our OTCM utility/governance token is being formally classified under the five-category taxonomy — potentially as a Digital Commodity or Digital Tool

outside SEC jurisdiction entirely

"

 

📊

PART 5:5 PRIORITY ACTIONPriority PLANAction Plan — VERSIONVersion 2.0

 

PriorityPri

#

Action Item

Complexity

Timeline

Status

🔴 

1

Retire Howey Shield language globally — all ST22 Digital Securities and utility token documents

Low

1–2 weeks

☐ Open

🔴 

2

Update Whitepaper V6.1V7.0 and PPM with five-category taxonomy and Release 33-11412 citations

Medium

2–4 weeks

☐ Open

🔴 

3

Update all risk disclosures and marketing materials

Low

2–3 weeks

☐ Open

🟡 

4

Engage counsel to formally classify OTCM utility token under five-category taxonomy

Medium

3–6 weeks

☐ Open

🟡 

5

Await no-action letter response (deadline: April 30, 2026)

Low

Ongoing

🔄 Active

🟡 

6

Monitor and evaluate innovation exemption rulemaking (expected April–May 2026)

High

4–8 weekswks post-publicationpub

☐ Open

🟡 

7

Develop standardized issuer disclosure package for non-reporting OTC issuers

Medium

4–8 weeks

☐ Open

🟢 

8

Formalize ESTEmpire Stock Transfer blockchain/ledger integration documentation

Low

2–4 weeks

☐ Open

🟢 

9

Document investment contract termination analysis for utility token

Medium

4–6 weeks

☐ Open

 

Legend: 🔴 High Priority | ·  🟡 Medium Priority | ·  🟢 Low Priority | ·  🔄 In Progress

 

🎯

CONCLUSION

CONCL  Conclusion — VERSIONVersion 2.0

 

Release No. 33-11412 is the most consequential federal regulatory development for OTCM Protocol since the January 28 Joint Staff Statement — and in most respects, it is better news than Version 1.1 could have anticipated.

The five-category taxonomy resolves OTCM Protocol'Protocol’s single largest compliance challenge from Version 1.1: the Howey Shield problem. The OTCM utility/governance token no longer needs an awkward commodity classification argument — it may now be classified as a Digital Commodity, Digital Collectible, or Digital Tool under binding federal interpretation, entirely outside SEC jurisdiction. The ST22 Digital Security Token is unambiguously a Category 5 Digital Security, backed by binding law rather than Staff guidance.

The binding nature of Release No. 33-11412 also upgrades OTCM Protocol'Protocol’s entire compliance story from "“aligned with Staff guidance"guidance” to "“aligned with binding federal interpretation"interpretation” — a meaningful difference when speaking with institutional investors, issuers, and regulators.

 

Three strategicStrategic questionsQuestions remainRemain openOpen as of— March 19, 2026:2026

1.

  1. CEDEX trading venue status — awaiting no-action letter response and innovation exemption rulemaking

  2. 2. Utility token formal classification — requires counsel engagement under the five-category framework

  3. 3. Innovation exemption eligibility — OTCM Protocol should position proactively for sandbox consideration

On all three, OTCM Protocol'Protocol’s existing architecture — 42 Transfer Hook controls, Empire Stock Transfer Category 1 Model B custody, permanently locked liquidity,Global Unified CEDEX Liquidity Pool, non-custodial CEDEX — represents the strongest possible starting position.

 

📋

Compliance Summary — Version 2.0

 

✅ Binding Interpretive Release Alignment

🔄 In Progress

⚠️ Adjustments Needed

✅ Category 5 Digital Securities classification

🔄 No-action letter (— filed Mar 30)30

⚠️ Utility token formal classification

✅ Category 1 Model B architecture

🔄 Innovation exemption monitoring

⚠️ Howey Shield language retirement

✅ SEC-registered transfer agent custody

🔄 Issuer disclosure package development

⚠️ Document updates (Whitepaper,— PPM)Whitepaper V7.0, PPM

✅ True equity backing 1:1


 

⚠️ Trading venue compliance resolution

✅ CUSIP assignment


 

⚠️ Broker-dealer determination

✅ Protective conversion triggers


 


 

✅ Tripartite legal structure


 


 

✅ 42 Transfer Hook compliance controls


 


 

✅ GENIUS Act stablecoin settlement path


 


 

✅ Non-custodial CEDEX architecture


 


 

 

📚

Key Regulatory References — Version 2.0

 

Document

Date

Legal Weight

Release Nos. 33-11412; 34-105020

— SEC–CFTC Joint Interpretive Release on Crypto Asset Classification

March 17, 2026

🔴

Binding

— Final Rule and Interpretation

Release No. 34-105047

— SEC Approval of Nasdaq Tokenized Securities Rule

March 18, 2026

🔴

Binding

— Exchange rule approval

Joint Staff Statement on Tokenized Securities

— Division of CorporationCorp. Finance,Fin., DivisionDiv. ofInv. InvestmentMgmt., Management, Division ofDiv. Trading and& Markets

January 28, 2026

🟡 Persuasive — Staff guidance (substantially superseded by 33-11412)11412

SEC–CFTC Memorandum of Understanding

— Joint Harmonization Initiative

March 11, 2026

🟡 Operative agreement

Innovation Exemption Rulemaking

Expected April–May 2026

🔲 Forthcoming

 

⚖️

DISCLAIMER

Disclaimer

This analysis is provided for informational purposes only and does not constitute legal or investment advice. Market participants should consult qualified securities counsel regarding specific compliance requirements. Release No. 33-11412 was effective upon Federal Register publication, which had not yet occurred as of the analysis date of March 19, 2026.

Groovy

Field

Value

DocumentCompany, Version

2.0

Distribution

InternalInc. /dba Investor Relations

Prepared by

OTCM Protocol Strategicis Analysisa Team

Supersedes

VersionWyoming 1.1Corporation (JanuaryCIK: 29, 2026)1499275).

 

© 2026 Groovy Company, Inc. dba OTCM Protocol  ·  All Rights Reserved  ·  Version 2.0  ·  March 2026  ·  Internal / Investor Relations

 

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