SEC Approves Tokenized Stock Trading Exemption for Five Years

The U.S. Securities and Exchange Commission (SEC) has granted an innovation exemption for tokenized stock trading, paving the way for platforms like Coinbase and Robinhood to offer tokenized stocks to their users. The exemption, which lasts for five years, provides a pathway for traders to trade traditional assets 24/7.

The SEC's order grants conditional exemptive relief to Tokenized Securities Venues (TSVs) to trade tokenized National Market System (NMS) stock using innovative permissioned automated market makers and liquidity pools. This development comes just days after the CLARITY Act cloture vote failed, but SEC Chair Paul Atkins stated that the crypto agenda will still proceed regardless of what happens with the bill.

The innovation exemption now allows platforms like Hyperliquid's HYPE to offer tokenized stocks through its HIP-3 market. Kraken's parent company, Payward, has confirmed that it is bringing Hyperliquid's HIP-3 markets to its users. SEC Chair Paul Atkins described this as a 'significant step' toward bringing America's capital markets into the digital age.

The exemption comes with several conditions, including limits on the number of symbols and volume traded, verification that tokenized stocks provide holders with the same rights and privileges as traditional stockholders, and requirements for auditable smart contracts deployed on a public, permissionless distributed ledger. The SEC has also solicited public comment on possible modifications to the exemptive relief.