SEC Grants Conditional Exemption for Tokenized Stock Trading
The U.S. Securities and Exchange Commission (SEC) has issued a five-year conditional exemption, dubbed the 'Innovation Exemption,' allowing trading venues to facilitate tokenized versions of publicly listed stocks without being classified as an exchange under the Securities Exchange Act of 1934. This exemption applies specifically to Tokenized Securities Venues (TSVs), which use permissioned automated market makers and liquidity pools. TSVs must adhere to several requirements, including caps on listing symbols and trading volume, ensuring token holders receive full economic and governance rights equivalent to traditional shares, and halting trades when the underlying stock is halted. The exemption does not cover synthetic tokens or derivatives but only those representing real ownership of stocks. The SEC also requires TSVs using smart contracts to deploy them on public blockchains and make them auditable. This move comes after a failed attempt in Congress to pass broader crypto market legislation, highlighting the regulatory uncertainty still facing digital assets.
Topics: capital markets digital assets SEC exemption tokenized stocks