SEC Greenlights Tokenized Stock Trading on Blockchain
The Securities and Exchange Commission (SEC) has given permission for certain venues to temporarily trade tokenized National Market System (NMS) stocks through onchain automated market makers and liquidity pools. This decision, made on September 17, marks a significant shift towards integrating traditional Wall Street practices with the decentralized finance (DeFi) space.
The exemption allows Tokenized Securities Venues (TSVs) to use these mechanisms for trading tokenized NMS stocks while the regulator monitors the experiment and collects public trading data. This will help shape longer-term rules for this emerging area of financial innovation.
The SEC has set limits on the experiment, including requirements for public notices, transaction transparency, trading-stoppage coordination, recordkeeping, and technology safeguards. TSVs must also meet conditions covering symbol limits and volume caps tied to limit up-limit down tiers.
The regulator is interested in studying the resulting data from this experiment, which will provide valuable insights into the viability of tokenized stocks trading through onchain automated market makers and liquidity pools.