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In brief Orca and Loopscale merged under the Formation brand, headquartered in New York, with Loopscale co-founder Luke Truitt as CEO; financial terms were not disclosed. Formation targets financing for AI, energy, robotics and defense assets, backed by Orca's $550 billion-plus in trading volume and Loopscale's $150 million in deposits and $2 billion in loans facilitated. Formation plans to operate a tokenized securities venue under the SEC's five-year Innovation Exemption and to introduce issuer tools within 12 months. Solana decentralized exchange Orca and lending protocol Loopscale are merging into a single company called Formation, the two teams announced Wednesday.

The new firm is headquartered in New York and led by Loopscale co-founder Luke Truitt as CEO, with fellow co-founder Mary Gooneratne as chief operating officer and Orca's Christopher Montagano as chief strategy and legal officer. Neither announcement discloses financial terms.

Myriad: Where does Solana go next? Click to make your prediction.Formation pairs Orca's trading infrastructure with Loopscale's credit order book and vaults, so an issuer can launch an asset with trading and credit live from day one, according to Loopscale's FAQ. Orca has processed more than $550 billion in trading volume since 2021, while Loopscale reports more than $150 million in deposits and over $2 billion in loans facilitated, according to the companies’ own numbers.

The idea is to provide a full stack of decentralized financial services, integrating liquidity solutions, credit, and vaults into one platform.

Orca launched in February 2021 and raised an $18 million Series A that September. Loopscale, formerly known as Bridgesplit, raised $4.25 million in 2021 from CoinFund, Jump, Coinbase Ventures, Solana Ventures, and Room40.

Formation is targeting AI, energy, robotics, and defense companies whose financing needs it says traditional markets serve poorly.

Truitt cast the merger as a bet that capital markets have to keep pace with the industries they fund. "Every major technological revolution has been paired with a financial one," he said in the press release.

Formation’s business is exploring the possibilities opened by the SEC's Sept. 17 innovation exemption, a five-year order that lets tokenized securities venues trade tokenized U.S.-listed stocks through permissioned automated market maker pools without registering as exchanges. Formation says it plans to operate such a venue and pursue additional licenses, building on Orca's nearly two years of engagement with securities and commodities regulators.

Formation's press release adds that its planned products are subject to legal and regulatory requirements and may not be available to U.S. persons. Loopscale's lending, borrowing, vaults and order book keep running as before, and existing positions are unchanged.

ORCA will serve as the token for all of Formation, so Loopscale will not launch its own, per the same FAQ. Loopscale points keep accruing and will convert later this year.

Over the next 12 months, Formation plans to introduce tools for issuers and new capital allocation strategies alongside its existing trading, lending and vault products.

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DeFi has spent years claiming it can move markets faster and cheaper than Wall Street. Now it gets a chance to prove it under regulatory supervision.

Speaking at Korea Blockchain Week 2026, Orca Chief Legal Officer Christopher Montagano said the SEC’s new innovation exemption allows decentralized finance to test whether blockchain rails are actually more efficient than traditional ones.

What the SEC exemption actually allows The SEC issued its Innovation Exemption on September 17, 2026. It grants five years of conditional relief, running until September 17, 2031.

Under the framework, Tokenized Securities Venues (TSVs) and certain liquidity providers can run permissioned trading of tokenized US-listed National Market System (NMS) stocks.

The exemption was built with automated market makers (AMMs) and liquidity pools on public blockchains in mind. On a traditional exchange, buyers and sellers are matched through an order book, with registered dealers and exchanges standing in the middle. An AMM swaps that structure for a pool of assets and a pricing formula, so trades execute against the pool rather than against a specific counterparty. The exemption lets these pools operate without the parties involved registering as exchanges or dealers in the traditional sense.

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The fine print keeps it from being a free-for-all The exemption explicitly states that it is not a ruling on decentralized finance. It also requires compliance controls, including adherence to sanctions rules and issuer consent. Put simply, the company whose stock is being tokenized has to sign off, and the venue has to screen who is trading.

Those conditions draw a clear line between this framework and fully permissionless DeFi, where anyone with a wallet can trade anything.

Montagano said the innovation exemption allows DeFi to test if blockchain rails are more efficient than traditional ones.

Orca’s long road to this moment Orca has been involved in discussions with the SEC around these frameworks since at least 2025. Much of that work has run through Project Open, an effort aimed at compliant on-chain trading of listed equities.

Orca has also had a head start in practice. Tokenized stocks have been trading on the platform since November 2025, including Forward Industries common stock.

Korea Blockchain Week 2026, which wrapped on October 1, 2026, featured tracks focused on regulation and on-chain finance.

What this means for DeFi and traditional markets The five-year window runs until September 17, 2031, giving builders, liquidity providers and regulators time to gather real data on whether on-chain trading of listed stocks delivers on its promises.

For DeFi protocols, the exemption rewards projects willing to build permissioned layers, issuer relationships and sanctions screening. Protocols committed to fully open access may find themselves outside the framework entirely.

Market reaction to Montagano’s remarks has so far been muted. The bigger signal will come from adoption: how many TSVs launch, how much liquidity flows into tokenized stock pools, and how many issuers agree to have their shares traded on-chain.

Because the exemption is conditional and time-limited, its eventual outcome could shape whether a permanent framework follows, or whether the experiment quietly expires in 2031.

Disclosure: This article was edited by John Chen. For more information on how we create and review content, see our Editorial Policy.