SEC Unveils Innovation Exemption for Tokenized Stock Trading
The US Securities and Exchange Commission (SEC) has released its long-awaited 'Innovation Exemption' to allow on-chain trading of tokenized stocks on eligible venues. This exemption takes effect immediately, coming after the Senate rejected the Clarity Act bill by 49 votes to 50.
According to SEC Chairman Paul Atkins, the measure is a direct response to the legislative standstill and an autonomous step forward within its statutory authority.
The exemption allows certain trading venues, called 'tokenized securities venues', to be excluded from the definition of exchange under law. It also exempts certain liquidity providers from being classified as dealers when they trade stocks or provide liquidity through automated market makers, that is, smart contracts.
Eligible venues must comply with applicable sanctions rules and the exemption does not cover synthetic instruments, those that replicate the price of an asset without directly holding it. Issuers retain the power to prevent their stocks from being traded on these platforms.