SEC Unveils Five-Year Exemption Framework for Tokenized Stock Trading
The Securities and Exchange Commission (SEC) has introduced an exemption framework that allows regulated platforms to facilitate tokenized U.S. stock trading on public blockchains for a five-year period. This move enables these platforms, known as Tokenized Securities Venues (TSVs), to deploy smart contracts and liquidity pools instead of conventional order book systems.
The TSVs will have veto authority over the companies whose stocks are being tokenized, requiring 30-day advance notification before third parties can tokenize their securities. Companies retain control through this provision, which emerged following a public controversy when AMC Entertainment's CEO objected to Robinhood's introduction of AMC-linked stock tokens without corporate authorization.
The framework also imposes volume restrictions on the platforms, capping the most liquid securities at 0.25% of average daily trading volume per platform. This move supports the SEC's exploration of continuous 24/7 trading markets, with tokenization identified as a crucial enabling technology.