SEC OKs Temporary Framework for Tokenized Securities Trading

U.S. regulators have established a temporary framework for platforms offering tokenized versions of certain U.S. stocks, allowing approved venues to use onchain automated market makers while regulators review future rules for digital securities markets.

The SEC's 'Innovation Exemption' gives temporary regulatory relief to Tokenized Securities Venues (TSVs), which can trade tokenized National Market System (NMS) stocks through permissioned automated market maker liquidity pools.

Under the exemption, TSVs are allowed to operate without being classified as a traditional exchange under the Securities Exchange Act of 1934, but must meet strict requirements before offering tokenized stock trading. Tokenized shares available on TSV platforms must represent real securities and holders must receive the same rights as owners of traditional shares.

The SEC has also rejected synthetic versions of tokenized stocks under the new framework, requiring eligible tokenized securities to come from the original issuer or a third party that meets SEC requirements. Additional requirements cover access rules, trading limits, and public information, with only approved participants able to trade on TSV platforms.