SEC rules favor Coinbase and Ondo over Robinhood in new tokenized stock framework

SEC opens five-year path for compliant tokenized stocks

The US Securities and Exchange Commission (SEC) has announced a new five-year rule that allows certain digital assets backed by US stocks to be traded on the blockchain without the providers registering as full securities exchanges. This move, called an "Innovation Exemption," creates a legal lane for tokenized stocks, but only if they meet strict conditions. The announcement sent crypto markets up, with Bitcoin and Ethereum rising over 10% and Uniswap’s token gaining more than 30%. Robinhood CEO Vlad Tenev celebrated the news, saying tokenization was "coming to America." However, the SEC’s rules are narrow. Most existing tokenized stock products do not meet the new standards because they do not give holders the same legal rights as traditional shares.

Strict rules on rights and trading venues

To qualify under the new rules, a tokenized stock must give the holder the same rights as the underlying share, including dividends and voting rights. Tokens that only track the price of a stock without these rights are considered "synthetic" and are not compliant. The exemption also requires that trading happens in permissioned automated market maker (AMM) liquidity pools. An AMM is a way of trading crypto on a blockchain that uses computer code to set prices rather than a traditional order book where buyers and sellers match directly. The "permissioned" part means the venue must check that users are allowed to trade, typically through identity verification. Commissioner Hester Peirce noted that the exemption covers one specific model and that the SEC is open to other methods in the future, but for now, the path is limited.

Coinbase and Ondo are closest to compliance

Coinbase’s current tokenized stock offering is described by CEO Brian Armstrong as fully backed by real securities, with dividends included and voting rights coming soon. This aligns closely with the SEC’s model. However, Coinbase’s product is currently only available to non-US customers, and its main trading platform uses a traditional order book, not the permissioned AMM pools required by the exemption. Coinbase also operates the Base network, which could potentially be adapted to meet the new rules. Ondo Finance is also well-positioned. It launched tokenized US securities in June, holding the actual shares in traditional custody while giving investors an onchain token representing their entitlement. Ondo has also acquired infrastructure including a broker-dealer and transfer agent, which helps it manage the complex requirements of both traditional and onchain markets. Peter Curley, head of global regulatory affairs at Ondo, said the SEC’s exemption favors the model his company has already proven out. However, he warned that no company should assume their product qualifies automatically.

Uniswap’s infrastructure could open doors

Uniswap introduced "Permissioned Pools" in July, a feature that allows regulated assets to trade on its platform while enforcing compliance rules directly on the blockchain. This infrastructure allows issuers to control who can trade or provide liquidity. While Uniswap itself is not a trading venue for securities, its v4 technology could be used by companies building a compliant tokenized stock platform. If Uniswap’s system can be connected to the shareholder rights and regulatory checks required for US stocks, it could become a key part of the ecosystem.

Robinhood and Kraken face hurdles

Robinhood has around 200 stock tokens on its own blockchain, but these products do not fit the SEC’s new rules. Robinhood’s Stock Tokens are issued by a Jersey-based entity and provide economic exposure to stocks without giving holders legal or beneficial rights. They are also not registered under US securities laws and are not available to US persons. Kraken’s xStocks are backed by actual shares but also fail to provide the same rights as conventional shares. Simply being backed by shares is not enough to qualify for the exemption. Experts suggest the industry will shift toward "issuer-sponsored" models, where the stock company itself sponsors the token, rather than third parties creating synthetic products. Bryan Choe of RWA.xyz expects most products to move to this model within the next 12 months.

Five years to prove the value

The SEC’s exemption is temporary, lasting five years while the commission evaluates future rules. Chairman Paul Atkins said the period will allow the market to develop. The real test will be whether investors want to use tokenized stocks. The benefits could include 24/7 trading, faster settlement, and fractional ownership. However, investors need to see clear advantages over traditional brokerages, such as lower costs or better prices. Questions remain about whether the current fragmented liquidity of stock tokens can provide good prices and a smooth user experience.

Key points

• The SEC approved a five-year exemption for tokenized US stocks, but only those with real shareholder rights like dividends and voting.
• Products are "synthetic" if they track price but do not provide legal rights, and these are not compliant.
• Trading must happen in permissioned pools, requiring user verification.
• Coinbase and Ondo have infrastructure that closely matches the new rules.
• Robinhood and Kraken’s current products do not give holders the required legal rights and are not compliant.
• Uniswap’s new compliance features could support compliant trading venues.
• The market has five years to prove that tokenized stocks are better than traditional brokerages for users.

What the SEC order says

The SEC’s order from September 17 provides temporary relief from exchange registration requirements for venues trading tokenized National Market System (NMS) stocks through permissioned AMM liquidity pools. The agency emphasized that the token itself must provide the same rights as the underlying security. The issuer of the stock also has the right to stop a token from being traded if they choose not to sponsor it.

Sources

• Cointelegraph

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