The U.S. Securities and Exchange Commission is developing a regulatory framework, including an 'innovation exemption,' that could permit tokenized U.S. stocks to trade around the clock on blockchain networks. This move aims to integrate blockchain technology into traditional financial markets while maintaining federal securities rules.
This regulatory development could significantly alter U.S. stock market operations by enabling continuous trading and faster settlement, potentially increasing market access and efficiency for investors while requiring new infrastructure and investor protection measures.
The U.S. Securities and Exchange Commission (SEC) is developing a regulatory framework that could pave the way for tokenized U.S. stocks to trade continuously, 24 hours a day, seven days a week, on blockchain networks. This initiative, centered around an 'innovation exemption,' aims to create a regulated path for digital versions of equities, moving them closer to established market infrastructure.
SEC Chair Paul Atkins has expressed support for the exemption as part of a broader strategy to integrate blockchain technology into U.S. financial markets. The proposed framework would allow qualified platforms to trade tokenized securities under tailored SEC requirements, ensuring they remain subject to federal securities laws. This could potentially overcome the limitations of traditional fixed trading hours, enabling trading during nights, weekends, and holidays.
While the exemption is still under development and has not yet taken effect, the SEC's work signals a move towards accommodating blockchain-based trading. The agency acknowledges that significant issues such as custody, investor protection, market surveillance, and integration with existing clearing systems need to be addressed. Market participants, including traditional exchanges like Nasdaq and clearing firms like DTCC, are already investing in infrastructure for tokenized securities. Ondo Finance has also submitted proposals supporting changes to Regulation NMS to accommodate alternative trading models.
Tokenized stocks will continue to be classified as securities, regardless of whether ownership records are maintained on a blockchain. The structure of these products, particularly the distinction between issuer-backed tokens and third-party models, will be crucial in defining investor rights. The SEC's efforts suggest a future where blockchain infrastructure plays a more integrated role in U.S. financial markets.