SEC Exemption Opens Door to Blockchain Trading for Big Fintech Players

The US Securities and Exchange Commission's (SEC) new five-year exemption for tokenized-stock trading on public blockchains has sparked interest among analysts at Goldman Sachs and Citizens.

The framework allows qualifying Tokenized Securities Venues to facilitate trading of tokenized National Market System stocks through permissioned automated market makers and liquidity pools, but it comes with several conditions, including the requirement that tokenized stocks provide holders with the same rights and privileges as traditional securities.

Coinbase, Robinhood, and Circle have been identified by Goldman Sachs and Citizens analysts as companies that could benefit from this exemption. Coinbase's existing tokenized-equity products already contain features required under the SEC framework, but it would need to develop compatible infrastructure or route qualifying activity through automated market maker-based systems.

Rubinhood faces a shareholder-rights requirement, as its existing offshore stock-token products do not currently satisfy all of the SEC's requirements. Circle could gain from increased demand for USDC stablecoin in settlement and collateral functions.