SEC clears path for tokenized stock trading

• Key takeaway: The Securities and Exchange Commission's temporary "innovation exemption" allows tokenized securities venues, or TSVs, to facilitate secondary trading of tokenized stocks using blockchain-based systems. 
• Expert quote: "This exemption is a principled, structured grant of relief designed to resolve genuine legal uncertainty that has driven innovation away from the United States." —Securities and Exchange Commission Chair Paul Atkins
• What's at stake: Industry insiders say SEC and CFTC rules may not have the same permanence as legislation passed by Congress and could be more easily changed by future administrations.

WASHINGTON — The Securities and Exchange Commission on Thursday issued an order allowing some tokenized U.S. stocks to be traded on blockchain-based platforms under a temporary, limited regulatory framework.

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The agency's "innovation exemption" allows secondary trading of tokenized stocks on tokenized securities venues, or TSVs, using blockchain-based systems. The order expires in five years and includes several restrictions.

SEC Chair Paul Atkins said in a recorded video address that the exemption is intentionally limited in scope, giving the market a defined window to operate while the agency evaluates potential future rulemaking.