SEC Unveils Five-Year Exemption for Tokenized Stocks and Liquidity Providers

The US Securities and Exchange Commission (SEC) has announced a new regulatory framework for tokenized stocks, allowing certain platforms to facilitate trading in blockchain-based securities.

The 'Innovation Exemption' provides a five-year exemption from traditional stock exchange rules for tokenized securities venues, including liquidity providers. The exemption also requires platforms to notify companies before listing tokenized versions of their shares and prohibits offering tokenized securities if the underlying issuer objects.

SEC Chairman Paul Atkins said the Innovation Exemption is intended to facilitate on-chain trading of certain tokenized stocks while maintaining investor protections and market integrity standards.

Crypto-related stocks rose sharply on Friday as Bitcoin reclaimed the $80,000 level. Strategy (formerly MicroStrategy) MSTR gained about 12%, Coinbase Global surged 10%, Galaxy Digital and Circle Internet Group each gained 7% and 6% respectively, while Robinhood Markets added 7.5%. The gains came after the SEC's announcement.