SEC Opens Path to 24-Hour Tokenized Stock Trading on Public Blockchains
The US Securities and Exchange Commission (SEC) has announced a five-year regulatory pathway for tokenized stocks to trade on public blockchains. The 'Innovation Exemption' framework allows trading venues and liquidity providers to facilitate trading in tokenized representations of US stocks without being treated as traditional national securities exchanges or registered broker-dealers.
The exemption applies to platforms that meet nine conditions, including U.S. incorporation, screened traders, auditable smart contracts on permissionless blockchains, 30-day issuer notification with opt-out rights, sanctions compliance, and trading halts mirroring the underlying stock.
Coinbase needs upgrades for full voting rights, while Robinhood faces a bigger restructuring challenge as its current stock tokens provide synthetic exposure. Securitize appears closely aligned with the agency's shareholder-rights requirements.