SEC Gives Onchain Stock Trading a Temporary Green Light

The Securities and Exchange Commission (SEC) has granted temporary relief to venues that trade tokenized U.S. stocks onchain, allowing them to operate without being treated as an exchange under the Securities Exchange Act of 1934.

The exemption, known as the 'Innovation Exemption', will remain in place for the next five years and is conditional upon Tokenized Securities Venues (TSVs) meeting specific requirements, including transparency, recordkeeping, technology safeguards, and trading limits.

The move could accelerate the convergence of traditional equities and crypto market infrastructure, potentially putting platforms such as Robinhood (HOOD), Coinbase (COIN), and Gemini (GEMI) into more direct competition with traditional brokerages like Charles Schwab (SCHW) and Morgan Stanley's (MS) E*Trade.

The SEC plans to use data from the temporary framework to inform potential longer-term rules for onchain securities, with Chairman Paul Atkins stating that the move is an effort to bring U.S. capital markets 'into the digital age'.