SEC Opens Door to Tokenized Stocks with New 'Innovation Exemption'
The Securities and Exchange Commission (SEC) has taken a significant step forward in embracing digital age trading by announcing an 'Innovation Exemption' for Tokenized Securities Venues (TSVs).
This temporary relief will allow TSVs to trade tokenized U.S. stocks onchain, using permissioned automated market makers and liquidity pools, without being treated as an exchange under the Securities Exchange Act of 1934.
The exemption, which will remain in place for five years, requires TSVs to meet specific requirements, including transparency, recordkeeping, technology safeguards, and trading limits. This move could accelerate the convergence of traditional equities and crypto market infrastructure, putting platforms like Robinhood (HOOD), Coinbase (COIN) and Gemini (GEMI) into direct competition with traditional brokerages.
The SEC will use data from this temporary framework to inform potential longer-term rules for onchain securities. This new path for tokenized U.S. stocks may bring retail investors closer to the digital age, but it also raises concerns about regulatory compliance and issuer control over third-party products referencing their shares.