SEC Grants Five‑Year Exemption for Tokenized Stock Trading

The U.S. Securities and Exchange Commission (SEC) issued a conditional exemptive relief order that allows eligible tokenized securities venues (TSVs) to trade blockchain‑based representations of National Market System (NMS) stocks for a period of five years.

Scope of the Exemption

Under the order, TSVs may use permissioned automated market makers and liquidity pools to facilitate trading of tokenized shares. The exemption does not create a new class of securities; each token must carry the same rights and privileges as the underlying share, including voting, dividend, and disclosure rights.

Key Conditions

• Token holders must receive identical shareholder rights as traditional shareholders.
• Smart contracts used by TSVs must be public, auditable, and deployed on a permissionless ledger, even though trading occurs in a permissioned environment.
• TSVs must halt trading of a tokenized stock if the primary exchange halts the corresponding U.S. listed share.
• Each venue faces limits on the number of stock symbols and the volume of trading activity it can support.
• Liquidity providers receive temporary relief from certain dealer‑registration requirements.
• Public disclosure of operations, trading activity, and related party transactions is required.

Impact on Platforms

The exemption provides a defined pathway for platforms such as Coinbase and Robinhood to launch tokenized U.S. equities, provided they meet the SEC’s conditions. It also allows for potential self‑custody features, though implementation will depend on each venue’s regulatory status.

Regulatory Context

The order arrives as the SEC continues to explore blockchain‑based trading under existing securities laws and seeks public comment on possible revisions. It follows recent developments, including Nasdaq’s approved trial of tokenized stock trading and the SEC’s proposal to modernize transfer‑agent rules to recognize blockchain records as official evidence of ownership.

Next Steps

The SEC has opened a public comment period on the exemption and scheduled a roundtable on 24‑hour U.S. equity trading to discuss market resilience and technical requirements.