SEC grants temporary exemption for tokenized US stock trading

The US Securities and Exchange Commission (SEC) has granted a temporary exemption permitting limited trading of tokenized US stocks on specific onchain platforms. This Innovation Exemption, approved on Thursday, enables Tokenized Securities Venues (TSVs) to facilitate permissioned trading of National Market System (NMS) stocks via automated market makers and liquidity pools.

The exemption is subject to stringent requirements, such as transaction transparency, comprehensive recordkeeping, and robust technology safeguards. SEC Commissioner Mark Uyeda emphasized that TSVs must submit regular US dollar-denominated transaction data, encompassing prices, trade sizes, timestamps, pool addresses, end-of-day pool sizes, and daily volumes.

Uyeda highlighted that the Innovation Exemption is a controlled framework, with symbol and volume limits in place. This provision aims to provide the SEC with valuable data to evaluate onchain securities trading and inform forthcoming regulations. The SEC is currently soliciting public input on the framework, encompassing data, case studies, and insights from live or test environments.

The SEC had been conceptualizing the innovation exemption for several months, with SEC Chair Paul Atkins announcing in February that the regulator was contemplating a temporary framework allowing limited trading of tokenized securities through automated market makers while developing more extensive long-term rules.