SEC Greenlights Tokenized Stocks Amid Clarity Act Failure

The US Securities and Exchange Commission (SEC) has given its approval for trading venues to offer digital representations of company shares, known as tokenized stocks. The move is seen as a significant step forward in the adoption of blockchain technology in traditional finance.

The SEC's Innovation Exemption allows trading venues to issue tokenized stocks that provide holders with the same rights and privileges as traditional securities, including dividends and voting rights. This means that investors will be able to buy and sell these digital assets on a 24/7 basis, reducing counterparty risk through faster settlement.

The ruling is also seen as a victory for companies like Robinhood and Coinbase, which have been offering tokenized stocks overseas and saw their shares climb 5% and 6% respectively on the news. The SEC's exemption does not apply to synthetic tokens issued by third parties that mimic share prices but do not give owners any actual equity.

The New York Stock Exchange and Nasdaq are also preparing to allow round-the-clock trading, with Nasdaq already approved to issue some tokenized stocks and exchange-traded funds. SEC Chairman Paul Atkins said the move is designed to promote responsible innovation in the US while providing investor protections and market integrity standards.