SEC Clears Path for Tokenized Stock Trading on Public Blockchains

The U.S. Securities and Exchange Commission (SEC) has created a regulated pathway for trading tokenized versions of American stocks on public blockchains, according to senior agency official Taylor Lindman.

The 'Innovation Exemption' order, issued September 17, grants Tokenized Securities Venues (TSV) a five-year relief window from registering as a formal stock exchange. This applies to platforms that let investors trade blockchain-based versions of shares already listed on U.S. exchanges, using liquidity pools and automated pricing mechanisms.

Lindman said qualifying platforms could begin taking shape next quarter, with companies expected to file formal notices and unveil operational plans in the coming months. The exemption addresses a technical wrinkle that had complicated earlier tokenization efforts by extending matching relief to firms supplying capital to these blockchain-based trading pools.