SEC Unveils Five-Year Exemption for Tokenized Stock Trading

The US Securities and Exchange Commission (SEC) has introduced a five-year exemption for platforms that facilitate trading of tokenized stocks, which are digital tokens representing shares on a blockchain. This move aims to integrate digital assets more deeply into traditional markets.

The SEC exemption will allow companies to offer trading in blockchain-based or 'tokenized' stocks and other securities without complying with the rules of major stock exchanges like Nasdaq and NYSE for five years. Liquidity providers in tokenized stocks will also be exempt from dealer registration requirements during this period.

The platforms must notify companies before listing tokenized versions of their stocks and cannot offer those products if the issuer objects, according to an SEC official. Synthetic tokens offering exposure to a stock via a derivative or other product are not permitted under the exemption.