SEC Gives Tokenized Stock Platforms Five-Year Regulatory Relief

The US Securities and Exchange Commission has given tokenized stock trading platforms a five-year regulatory relief. This exemption allows platforms to offer digital tokens representing shares that can trade on a blockchain without adhering to traditional stock exchange rules.

Liquidity providers in tokenized stocks will also receive a five-year exemption from dealer registration requirements, according to Reuters. The move comes as crypto companies push to expand into stock trading, potentially bringing their platforms into greater competition with traditional brokerages.

The SEC has set guardrails for tokenized stocks, requiring platforms to notify companies before listing tokenized versions of their shares and prohibiting them from offering the token if the issuer objects. This exemption does not cover 'synthetic' tokens that provide exposure to a stock through a derivative or another product.