SEC Grants Five-Year Exemption For Tokenized Stock Trading Venues

TL;DR

• The SEC has granted temporary exemptions allowing certain tokenized U.S. stocks to trade on qualifying on-chain venues.
• The relief lasts five years after publication.
• Venues still face conditions around investor rights, smart contracts, trading halts and disclosures.

The SEC has taken one of its clearest steps yet toward bringing public-company shares on-chain.

The Commission approved a temporary “Innovation Exemption” allowing qualifying Tokenized Securities Venues to facilitate trading in tokenized National Market System stocks using permissioned automated market makers and liquidity pools.

The relief is set to expire five years after publication unless the regulatory framework changes in the meantime.

That makes this an experiment rather than a permanent rewrite of U.S. securities law, but it is still a fairly substantial one.

Tokenized Stocks, With Conditions

The exemption does not create a free-for-all.

The SEC laid out a series of requirements designed to keep the tokenized version tied closely to the legal and economic reality of the underlying stock.

Tokenized shares made available through a venue must provide holders the same rights and privileges as the corresponding conventional stock.