SEC Gives Tokenized Stocks Five-Year Reprieve

The Securities and Exchange Commission (SEC) has given tokenized stocks five years to prove themselves in the US market. This move comes after the Senate blocked a market structure bill for the crypto industry, known as the CLARITY Act.

Coinbase has already launched tokenized versions of popular stocks like Apple, Nvidia, Meta, and Alphabet on its Base blockchain, but these tokens are not available to American investors yet.

The SEC's order permits US-based venues to trade tokenized securities in a permissioned environment while the Commission considers further action. The order is narrower than expected, with requirements such as checking users' identities and staying under volume caps.

Alex Cutler, co-founder of Aerodrome, believes this move marks a significant shift from four years ago, when regulators were more skeptical of tokenized stocks. He notes that the SEC has demonstrated an understanding of Automated Market Makers (AMMs) behind decentralized exchanges.