The SEC has approved a temporary exemption permitting qualifying tokenized securities venues to facilitate trading in tokenized National Market System stocks using permissioned automated market makers and liquidity pools. The relief is set to expire five years after publication unless the regulatory framework changes.
This marks one of the SEC's clearest regulatory steps toward enabling on-chain trading of public-company shares, though the exemption is structured as a controlled experiment rather than a permanent revision of U.S. securities law.
Requirements and Conditions
The exemption includes several conditions designed to maintain alignment between tokenized shares and their underlying conventional securities.
- Tokenized shares must provide holders the same rights and privileges as the corresponding conventional stock
- Venues face limits on trading symbols and volume
- Smart contracts must be auditable, public, and deployed on a public permissionless distributed ledger
- If trading in the underlying stock halts on its primary exchange, trading in the tokenized version must stop immediately
These requirements ensure the SEC is not creating a parallel stock market operating independently from Nasdaq or NYSE-listed securities rules, but rather providing an alternative technical infrastructure for trading the same economic asset.
A Pathway for On-Chain Markets
For blockchain infrastructure companies, the exemption creates a controlled regulatory pathway. Tokenization has historically occupied an uncertain position—technically feasible but difficult to scale within existing securities regulation designed around conventional market architecture.
The SEC's order allows market participants to test on-chain execution methods while the Commission collects feedback on potential longer-term structures. This approach permits limited on-chain secondary trading of U.S. listed shares while maintaining existing investor protections.
