SEC Grants Five‑Year Exemption for Tokenized US Stocks After CLARITY Act Stalls

The U.S. Securities and Exchange Commission (SEC) issued a five‑year Innovation Exemption that creates a limited framework for tokenized securities venues (TSVs) to trade regulated U.S. stocks on blockchain‑native platforms. The move follows the Senate’s procedural vote that stopped the CLARITY Act, a comprehensive crypto market‑structure bill, from advancing.

Scope of the exemption

TSVs may operate as permissioned automated market makers and liquidity pools. Qualified venues receive temporary relief from exchange registration under the Securities Exchange Act, and liquidity providers using their own capital may be exempt from dealer‑registration requirements. The exemption is limited to tokenized National Market System stocks that carry the same rights as the underlying shares, including dividends and voting.

Regulatory safeguards

• Symbol and volume caps on trading activity.
• Mandatory transparency of prices, trade sizes, timestamps, pool addresses and daily volumes.
• Requirements for trading halts, record‑keeping and technology safeguards.
• Venues must be U.S. persons, comply with OFAC sanctions and restrict access through permissioned entry.
• Issuers retain the right to object to tokenization of their securities.

Industry reaction

U.S. crypto firms that have offered tokenized equity products abroad, including Robinhood, Kraken and Coinbase, welcomed the exemption as a pathway to bring on‑chain equity trading ontoshore. Robinhood’s crypto general manager described the action as a “major step” that will enable liquid tokenized securities markets in the United States.

Market context

Offshore tokenized‑stock markets have shown rapid growth, with tokenized equities reaching a market cap of $3.2 billion and generating $15.75 billion of 30‑day DEX trading volume, including $2.95 billion on weekends. Token holders have risen sharply, and a small share of the market is already being used in decentralized finance protocols for lending and collateral.

Limitations and outlook

The exemption does not cover synthetic instruments that merely track stock prices, and trading caps may constrain activity during off‑hours. The five‑year window gives the SEC time to collect data and assess whether a permanent regulatory regime is needed.