SEC Grants 5-Year Exemption for Tokenized NMS Stock Trading via AMMs

The Securities and Exchange Commission (SEC) has granted a five-year exemption for tokenized National Market System (NMS) stock trading via permissioned automated market makers (AMMs). This decision allows certain Tokenized Securities Venues (TSVs) to facilitate trading of tokenized NMS stocks in a defined framework.

The exemption was announced just days after the Senate failed to move forward the CLARITY Act, which aimed to establish a broader cryptocurrency regulatory framework. SEC Chairman Paul Atkins described the policy as an initiative intended to 'bring America's capital markets into the digital age' by enabling tokenized NMS stock trading in a strictly permissioned environment.

The exemption requires that all rights and privileges of traditional securities must transfer to tokenized representations for venue eligibility. This includes voting rights, dividends, and other benefits that direct holders of traditional shares enjoy. TSVs must use public, auditable smart contracts deployed on permissionless distributed ledgers, and share information regularly about their trading activity and affiliations.