It’s here — SEC releases long-awaited innovation exemption to ‘bring America’s capital markets into the digital age’

On September 17, the U.S. Securities and Exchange Commission (SEC) announced an exemption that will allow companies to offer trading in tokenized stocks and other securities on blockchain platforms. This major move could integrate digital assets more deeply into traditional markets. The five-year exemption applies to platforms facilitating tokenized stock trading, granting them relief from many Nasdaq, NYSE, and other stock exchange rules.

Liquidity providers in tokenized stocks also benefit from a five-year exemption from dealer registration requirements. However, platforms would need to notify companies before listing tokenized shares and would be prohibited from offering these products if the issuer objects. Synthetic tokens offering exposure to a stock via derivatives or other products are not permitted under the exemption.

The SEC emphasizes that the exemption is necessary due to the challenges platforms may face in complying with federal securities laws without significant changes to their business models. The Innovation Exemption aims to balance investor protections and market integrity standards while allowing responsible innovation in the United States.

Prominent crypto players like Coinbase have expressed plans to launch tokenized stocks in the U.S. once the rules are in place, following Robinhood, Kraken, and other crypto exchanges already offering tokenized stocks overseas. The new exemption comes days after the U.S. Senate failed to advance comprehensive cryptocurrency legislation, presenting a significant opportunity for crypto upstarts to compete directly with traditional brokerages.

The SEC also highlighted that tokenized stock trading could enable investors to self-custody their assets and enhance transparency, marking a critical step in the broader SEC crypto policy shift under President Trump, who supported ending the Democratic crackdown on the industry and profited from his own crypto ventures.