SEC approves temporary framework for tokenized stock trading onchain
In brief
- SEC approved temporary exemption for Tokenized Securities Venues (TSVs) to trade tokenized US stocks onchain.
- TSVs operate under Innovation Exemption with restrictions on symbols, volumes, and mandatory transaction transparency.
- Compliance requires recordkeeping, safeguards, and public disclosure of USD-denominated transaction data.
- SEC will gather feedback to develop longer-term technology-neutral regulatory rules.
A Measured Approach to Blockchain Trading
TSVs will operate under the Innovation Exemption while the SEC studies their operations and considers how securities regulation should apply to blockchain-based markets. The agency isn't forcing new technologies into outdated rules. Instead, it's gathering real-world data to shape technology-neutral rules focused on investor protection and market integrity.
Qualifying venues can receive temporary relief when they provide permissioned trading in tokenized US stocks through innovative structures such as automated market makers and liquidity pools. The relief comes with guardrails—restrictions will apply to the number of symbols and trading volumes, with volume caps calibrated according to limit-up and limit-down tiers.
Compliance and Transparency Requirements
The exemption is conditional. TSVs must comply with requirements related to public notice, transaction transparency, trading stoppages, recordkeeping and technology safeguards. Participating venues must regularly make USD-denominated transaction data available to the public, including prices, trade sizes, transaction times, pool addresses, end-of-day pool sizes and daily trading volumes.
The SEC also provided targeted relief to certain liquidity providers that contribute their own capital, provided they meet disclosure and recordkeeping conditions.
What Tokenization Could Mean
The SEC said tokenization could modernize issuance, trading, transfers, settlement and ownership records while potentially lowering costs, improving transparency and expanding liquidity. This isn't speculative—it's the agency's own assessment of the technology's potential.
The SEC is seeking detailed public feedback, including metrics, case studies and incident analyses, as it studies the operation of these venues and considers potential longer-term rules. Commissioner Uyeda said the SEC will use information gathered through the exemption and future public comments to evaluate the approach and inform future policymaking.
Frequently asked questions
What are Tokenized Securities Venues (TSVs)?
TSVs are onchain venues approved by the SEC to trade tokenized shares of US stocks. They operate under a temporary Innovation Exemption while the SEC studies how blockchain-based markets should be regulated.
What restrictions apply to TSVs?
TSVs must comply with requirements covering public notice, transaction transparency, trading stoppages, recordkeeping, and technology safeguards. They also face restrictions on the number of symbols and trading volumes, with caps calibrated to limit-up and limit-down tiers.
How does the SEC plan to use this exemption?
The SEC is gathering data and public feedback, including metrics, case studies, and incident analyses, to study TSV operations and inform longer-term, technology-neutral rules for blockchain-based securities markets.
