SEC Exemption Sparks Debate Over Tokenized Stocks on XRP Ledger

The U.S. Securities and Exchange Commission (SEC) has issued an order granting temporary relief to Tokenized Securities Venues that trade tokenized U.S.-listed stocks through permissioned Automated Market Maker (AMM) liquidity pools.

The exemption, known as the SEC Innovation Exemption, will allow these venues to operate until September 17, 2031, while the agency weighs permanent rules. The order sets specific rules for these venues, including requiring them to deploy their smart contracts on a public, permissionless ledger and list no more than 75 Tier 1 stocks.

The XRP Ledger has had a native AMM since March 22, 2024, but the order does not mention it specifically. However, experts believe that this exemption could be a significant development for the XRP Ledger's native pools. Peter Curley, head of global regulatory affairs at Ondo Finance, noted that the exemption favors custodial models that pass real shareholder rights through to token holders.

The SEC's Innovation Exemption has also raised questions about the potential for tokenized stocks to be listed on other blockchains, including the XRP Ledger. However, it is unclear whether this will happen in the near future.