SEC approves temporary exemption for tokenized US stock trading
SEC allows limited onchain trading of tokenized US stocks
The US Securities and Exchange Commission (SEC) has approved a temporary exemption that allows limited trading of tokenized US stocks on certain onchain venues. The regulator approved the measure on Thursday.
Under the exemption, venues known as Tokenized Securities Venues (TSVs) can offer permissioned trading of tokenized National Market System (NMS) stocks. A tokenized stock is a blockchain-based version of a share, and an onchain venue is a trading platform that runs on a blockchain.
Trading caps, reporting duties and a public comment call
- TSVs can offer trading through automated market makers and liquidity pools. An automated market maker is software that sets prices instead of a traditional order book.
- Venues must meet requirements covering transaction transparency, recordkeeping and technology safeguards.
- They must regularly publish US dollar transaction data, including prices, trade sizes, timestamps, pool addresses, end-of-day pool sizes and daily volumes.
- Symbol and volume limits will apply, according to SEC Commissioner Mark Uyeda.
- The SEC is seeking public feedback, including data, case studies and information from live or test environments.
What the SEC statement says
Uyeda said the Innovation Exemption "is designed to be controlled." He said the framework would give the SEC data to assess onchain securities trading and to inform future rules. The SEC published his statement on its website.
The regulator had been working on the exemption for months. In February, SEC Chair Paul Atkins said the agency was considering a temporary framework that would allow limited trading of tokenized securities through automated market makers while it developed longer-term rules.
What is confirmed
The SEC approved a temporary innovation exemption. It covers permissioned trading of tokenized NMS stocks on TSVs, with transparency, recordkeeping and technology safeguards, plus regular publication of transaction data. The SEC is also collecting public input on the framework.
What is still unclear
The source material does not say when the exemption takes effect, how long it lasts, which venues or stocks it covers, or what the exact symbol and volume limits are.
Why the SEC wants this trading data
According to Uyeda, the framework is meant to give the SEC information to assess onchain securities trading and to inform future rules. The exemption is temporary and limited, and it operates alongside existing reporting and transparency obligations.
