SEC Greenlights Tokenised Stock Trading with Conditions

The U.S. Securities and Exchange Commission (SEC) has opened a regulatory pathway to trade U.S.-listed stocks in token form. This move is based on the SEC's 'innovation exemption', which will apply for 5 years and allows trading platforms and liquidity providers meeting certain conditions to handle tokenised stocks.

The requirement that token holders should have the same rights as existing shareholders is being debated by the investment industry, along with whether companies can object to their securities being issued as tokens. SEC Chairman Paul Atkins stated that the innovation exemption was designed 'to address problems that have prevented responsible innovation from taking root in the United States, while maintaining investor protection and market integrity standards.'

Tokenisation refers to issuing various forms of value, such as listed shares or real assets, in digital form on a blockchain network. Companies like Coinbase, Robinhood, Gemini, and Kraken exchange (under Payward) have already launched tokenised stock products in offshore markets but have not yet started services for U.S. customers.