SEC Grants Five-Year Exemption for Tokenized Stock Trading Venues

The U.S. Securities and Exchange Commission (SEC) has granted a five-year exemption for tokenized stock trading venues in the country.

This temporary 'Innovation Exemption' allows qualifying Tokenized Securities Venues to facilitate trading in tokenized National Market System stocks using permissioned automated market makers and liquidity pools.

The exemption does not create a free-for-all, as the SEC has laid out a series of requirements designed to keep the tokenized version tied closely to the legal and economic reality of the underlying stock.

Tokenized shares made available through a venue must provide holders the same rights and privileges as the corresponding conventional stock. The venues also face limits on symbols and trading volume, while smart contracts used in the system must be auditable, public, and deployed on a public permissionless distributed ledger.