Key facts
- The SEC has issued a five-year "Innovation Exemption" for trading tokenized US stocks.
- Qualifying platforms, called Tokenized Securities Venues, can trade tokenized US stocks on permissionless blockchains without registering as national exchanges.
- The exemption applies only to genuine tokenized stocks with full rights, excluding synthetic tokens.
- Issuers have a 30-day window to object to the third-party tokenization of their shares.
- Liquidity providers in these markets also receive a five-year exemption from dealer registration requirements.
The U.S. Securities and Exchange Commission (SEC) has approved a five-year "Innovation Exemption" that permits limited trading of tokenized US stocks on public blockchains. This move, announced two days after the Senate blocked the Clarity Act, allows qualifying platforms, termed Tokenized Securities Venues (TSVs), to operate without registering as national exchanges. SEC Chair Paul Atkins stated the exemption represents a significant step within the Commission's statutory authority to facilitate the integration of digital assets into traditional markets.
The exemption covers only genuine tokenized stocks that carry full rights, such as dividends and voting, excluding synthetic instruments. Issuers retain a 30-day window to object to the tokenization of their shares by unaffiliated parties. Liquidity providers participating in these venues also receive a five-year exemption from dealer registration requirements. The SEC held a roundtable on 24-hour trading shortly after approving the exemption, with Atkins suggesting tokenization could enable real-time inventory management.
In related news, S&P Global announced its acquisition of smart contract security firm OpenZeppelin, a move seen as bringing trusted data and risk assessment to onchain markets. Intercontinental Exchange (ICE), the parent company of the NYSE, is evaluating the Avalanche blockchain as a potential settlement layer for an in-development alternative trading system. Robinhood and Coinbase have also announced plans to incorporate redemption and voting rights for their stock tokens, aligning with the exemption's requirements.