SEC Creates Temporary Framework for Tokenized Stock Trading

The US Senate's failure to advance the CLARITY Act has left broader crypto market-structure legislation unresolved. However, the SEC has taken a step forward by creating a temporary framework for onchain trading of certain tokenized U.S. stocks.

The Securities and Exchange Commission announced its five-year 'Innovation Exemption' on September 17, allowing qualifying Tokenized Securities Venues (TSVs) to facilitate crypto trading in tokenized National Market System (NMS) stocks through permissioned automated market makers (AMMs) and liquidity pools.

Eligible tokenized shares must provide holders with rights and privileges equivalent to the underlying traditional securities. The framework includes requirements covering smart-contract transparency, trading volumes, issuer objections, and coordinated trading halts.