U.S. SEC Opens Limited Onchain Trading for Tokenized Stocks

Key Insights

• The U.S. SEC issued temporary relief allowing limited onchain trading of tokenized U.S. stocks.
• Tokenized Securities Venues face symbol, volume, access and disclosure requirements.
• The Innovation Exemption expires five years after publication unless the SEC takes further action.

The U.S. Securities and Exchange Commission opened a limited pathway for onchain trading of tokenized U.S. stocks on Sept. 17.

The SEC issued temporary, conditional relief allowing Tokenized Securities Venues to facilitate trading in certain tokenized National Market System stocks through permissioned automated market makers and liquidity pools.

The framework does not create a broad exemption for all tokenized equities. It establishes a controlled market structure while the SEC gathers data and considers longer-term rules.

A tokenized stock must provide holders with the same economic and governance rights as the equivalent traditional NMS stock. A venue must also notify an issuer before allowing an unaffiliated third party’s tokenized version of its stock to trade, and the issuer must receive an opportunity to object.

The framework places limits on symbols and transaction volumes, requires auditable smart contracts on public permissionless distributed ledgers, and ties tokenized trading halts to the primary listing exchange.

Certain liquidity providers using proprietary capital in approved automated market maker pools also receive conditional relief from the Exchange Act dealer definition.

The Commission relied on Section 36(a)(1) of the Securities Exchange Act. The Innovation Exemption will expire five years after publication unless the SEC takes further action.