SEC Gives Tokenized Stock Trading a Temporary Green Light

The U.S. Securities and Exchange Commission (SEC) has granted five-year conditional exemptions for Tokenized Securities Venues (TSVs) from the definition of 'exchange' under the Securities Exchange Act of 1934.

This temporary relief allows TSVs to trade tokenized National Market System stocks through permissioned automated market makers and liquidity pools, provided they meet certain conditions outlined in the SEC's order.

Tokenized NMS stock traded on a TSV must carry the same rights as traditional shares of an equivalent class, including voting rights, dividends, and proxies. Before listing a third-party issuer's tokenized shares, a TSV must give 30 days' written notice with an opportunity to object.

The exemption is conditional and temporary, not a lasting framework, and the SEC will solicit comments throughout the five-year period on the adequacy of risk-management conditions for permissioned AMMs and other safeguards needed for retail and institutional participants.