The Securities and Exchange Commission has approved an Innovation Exemption that permits qualifying venues to trade tokenized US stocks on public blockchains without obtaining national exchange registration. The exemption took effect immediately and is set to run for five years.
Under the new framework, platforms designated as Tokenized Securities Venues can operate tokenized equities through automated market makers and liquidity pools on permissionless chains. Firms providing liquidity through these venues receive separate relief from dealer registration requirements. Companies meeting the exemption's requirements can begin operating by notifying the SEC, with no application queue required.
SEC Chair Atkins stated that the Commission was taking the action within its statutory authority following Congress's unsuccessful attempt to pass the Clarity Act, which was blocked 49 to 50 in the Senate two days prior.
Key Limitations
The exemption applies only to genuine tokenized stocks that carry full ownership rights, including dividends and voting privileges. This restriction excludes price-tracking synthetic tokens that have driven offshore trading volume.
Additionally, while an unaffiliated party may tokenize a company's stock, the issuer retains the ability to object within 30 days and prevent those shares from being tokenized and traded on public blockchains. This provision grants companies a mechanism to control the tokenization of their securities.
Market Context
The approval occurred on the same day that S&P Global announced its acquisition of OpenZeppelin, a smart contract security firm. S&P Global Ratings characterized the purchase as bringing trusted data, benchmarks, and transparent risk assessment to assets moving onchain.
The SEC also held a roundtable discussion on 24-hour trading shortly after approving the tokenized securities exemption, with SEC leadership noting that tokenization could deliver real-time inventory management capabilities.
