SEC Grants Five‑Year Sandbox for Tokenized U.S. Stocks on Public Blockchains

The U.S. Securities and Exchange Commission has issued a temporary exemption that allows designated Tokenized Securities Venues (TSVs) to trade tokenized shares of U.S. companies on public, permissionless blockchains without registering as national securities exchanges. The exemption runs for five years and includes specific safeguards.

How the sandbox works

Qualified venues may use smart contracts and liquidity pools to facilitate trades of tokenized stocks, rather than traditional order‑book matching. The software must be public, auditable, and deployed on a permissionless chain, while access to the venue remains permissioned.

Eligibility and rights

• Tokens must convey the same voting, dividend and other shareholder rights as the underlying share.
• Synthetic products that only track price are excluded.
• Companies can veto tokenization of their shares by giving a 30‑day notice and objecting.

Volume and listing caps

• For the most liquid stocks, a venue may list up to 75 names and handle no more than 0.25% of average daily trading volume.
• For a broader tier, the cap is 250 names and 2.5% of average daily volume.

Impact on issuers and investors

Issuers are not required to create the tokens themselves; third parties may do so provided the issuer is notified and can object. Investors would own a token that represents an actual share, preserving all traditional rights, while trading on a blockchain‑based market.

Liquidity providers

Certain liquidity providers can receive conditional relief from dealer registration requirements, enabling them to supply assets to automated market makers (AMMs) that power the pools.

What does not change

The exemption does not permit leverage, lending, or unrestricted public access. Trading remains limited to permissioned participants, and the framework does not affect existing synthetic “stock‑linked” products.

Key participants mentioned

• Apple (AAPL)
• Tesla (TSLA)
• AMC Entertainment (AMC)