SEC Grants Five-Year Waiver for Blockchain-Based Stock Trading Platforms

The U.S. Securities and Exchange Commission on Thursday issued a long-anticipated regulatory exemption that clears the way for companies to facilitate trading in blockchain-based, or tokenized, versions of equities and other securities, a decision that could reshape how investors access traditional financial markets.

Under the new framework, trading platforms that handle tokenized stocks will receive a five-year reprieve from many of the rules that govern established exchanges such as Nasdaq and the New York Stock Exchange. Liquidity providers in these tokenized assets are also being granted a five-year exemption from dealer registration requirements.

The order, which takes effect immediately, includes several conditions designed to protect issuers and investors. Venues must notify companies 30 days before listing tokenized versions of their shares, and they are barred from offering such products if the issuer objects. Tokenized stocks permitted under the exemption will not be structured as derivatives and will carry the same rights and privileges as the underlying shares, including dividends and voting rights.

Synthetic tokens that provide exposure to a stock through a derivative or other financial product will not qualify for the exemption, according to an SEC official.