SEC Clears Path for On-Chain Trading of US Stocks

The Securities and Exchange Commission (SEC) has taken a significant step towards onboarding US capital markets to blockchain technology. The agency issued a temporary, conditional exemptive relief order that allows Tokenised Securities Venues (TSVs) to trade tokenized NMS stocks using permissioned automated market makers and liquidity pools without being classified as an exchange under the Exchange Act.

The exemption, dubbed the 'Innovation Exemption', marks one of the most significant steps the SEC has taken towards bringing US capital markets on-chain. SEC Chairman Paul Atkins framed it plainly: this is about bringing America's capital markets into the digital age, not about bending existing rules to fit new technology.

The order requires TSVs to meet strict conditions, including that smart contracts must be auditable, public, and deployed on a public, permissionless distributed ledger. Tokenized stocks must carry the same rights and privileges as their traditional equivalents, and trading must stop in any tokenized NMS stock the moment the underlying stock halts on its primary listing exchange.