SEC Paves the Way for Blockchain Stock Trading in Landmark Shift

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Federal regulators want to transform how investors trade public equities. The Securities and Exchange Commission (SEC) has unveiled a five-year "innovation exemption" allowing tokenized stocks to trade on public blockchains. Under the new policy, “Tokenized Securities Venues” operating automated market makers will receive relief from registering as traditional stock exchanges. Additionally, liquidity providers contributing proprietary capital will enjoy a temporary exemption from broker-dealer registration requirements.

Tokenization, the process of issuing and transferring traditional assets like stocks and bonds on blockchain, is seen as a way to potentially attract more investors and increase trading capabilities outside of regular stock market hours.

The New York Stock Exchange, Nasdaq and the London Stock Exchange are already planning to launch tokenized stocks. Crypto exchanges Coinbase and Kraken are also planning to offer them to customers. Several crypto exchanges, including Kraken and Robinhood, already offer tokenized stocks to customers in Europe.