SEC Grants Temporary Exemption for Tokenized US Stock Trading
The US Securities and Exchange Commission (SEC) has approved a temporary exemption allowing limited trading of tokenized US National Market System (NMS) stocks on certain onchain venues. This approval enables trading of tokenized securities via automated market makers and liquidity pools, subject to regulatory requirements on transparency, recordkeeping, and technological safeguards.
Details of the Temporary Exemption
On Thursday, the SEC approved an innovation exemption giving Tokenized Securities Venues (TSVs) the ability to offer permissioned trading of tokenized US National Market System (NMS) stocks on select platforms. The exemption covers trading via automated market makers and liquidity pools, with TSVs required to maintain transaction transparency, recordkeeping, and technology safeguards.
SEC Commissioner Mark Uyeda emphasized that TSVs must regularly publish USD-denominated transaction data such as prices, trade sizes, timestamps, pool addresses, end-of-day pool sizes, and daily volumes. Symbol and volume limits are also set to ensure controlled trading and mitigate risks.
Background and Next Steps
The SEC had developed this innovation exemption over several months. In February, SEC Chair Paul Atkins noted that the regulator was exploring a temporary framework to permit limited trading of tokenized securities through automated market makers as a bridge before establishing permanent regulations.
The SEC is soliciting public feedback, including data, case studies, and information from live or test environments, to gather practical insights. This will help inform future regulatory decisions and frameworks governing onchain securities trading.
Why it matters
The SEC’s temporary exemption marks a significant step towards integrating blockchain-based tokenized securities into regulated markets. By enabling controlled, limited trading and requiring thorough data reporting, the SEC can gather valuable information to better understand the risks and benefits associated with onchain securities trading. This approach balances innovation with investor protection and lays groundwork for well-informed, long-term regulatory frameworks in the emerging tokenized asset space.
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