SEC Issues New Rules for AMMs and Tokenized Stocks, Favors Compliance Over Innovation
The Securities and Exchange Commission (SEC) has issued new rules for Automated Market Makers (AMMs) and tokenized stocks, granting five years of conditional relief to a new category of operators called Tokenized Securities Venues (TSVs).
These venues must be US persons and comply with sanctions programs run by the Office of Foreign Assets Control. They also must have permissioned access, meaning only vetted participants can trade or provide liquidity.
The rules exclude most current tokenized stock products, which often track prices without making investors shareholders. This means that issuers such as Robinhood, Kraken, and Ondo will need to redesign their products to comply with the new regulations.
Some networks are better positioned than others to adapt to these new rules. Solana, for example, has a strong trading activity and already has a product structure that is closer to what the SEC has blessed. Ethereum, on the other hand, has a large number of tokenization firms operating there, which align with the models favored by the order.
The market caps are capped at certain limits, which will likely keep expectations modest for the first venues. Thomas Cowan, global head of tokenization at Bullish, stated that the exemption is not the broad opening the industry wanted.