SEC Opens the Door to Tokenized Stocks — With Strings Attached

The Securities and Exchange Commission on Thursday unveiled a five-year temporary exemption that will allow trading in blockchain-based, or "tokenized," stocks in the United States. Under the order, a new category of entity — "tokenized securities venues," or TSVs — is exempt from the definition of "exchange" under the Securities Exchange Act of 1934, and certain liquidity providers supplying those venues are exempt from the definition of "dealer."

The exemption

In practice, TSVs connect buyers and sellers of tokenized National Market System stocks through automated market maker (AMM) liquidity pools, on public blockchains, using smart contracts that must be auditable and publicly deployed. The exemptions are available to U.S. persons, including both incumbents and new entrants.

The conditions are significant. Tokenized stocks must offer the same rights as the equivalent class of traditional stock — including dividends and voting rights. Platforms must notify companies before listing tokenized versions of their stocks, and issuers who do not want their stock trading onchain can opt out. "Synthetic" tokens offering exposure via a derivative would not be permitted.

"The Innovation Exemption is designed to resolve challenges that have prevented responsible innovation from taking root in the United States while providing investor protections and market integrity standards," SEC Chair Paul Atkins said in a statement. The SEC described the exemption as an interim step toward permanent rules, with public comment to be solicited on next steps. Commissioner Hester Peirce issued a supportive statement noting the order's limited, carefully conditioned scope.

Why now

The move had been long anticipated — and long delayed. The exemption was expected as early as mid-August but was pushed back amid White House concerns about complicating negotiations over the Digital Asset Market Clarity Act, and Wall Street objections — led by trade group SIFMA — that market-structure changes should go through formal rulemaking. The Senate's failure to advance the Clarity Act cleared the political path. Regulators had already laid groundwork: the SEC approved Nasdaq's tokenized-stock proposal in March and the NYSE's the following month.

The market reaction

Shares of Securitize, the digital-asset securities firm that went public on the NYSE on July 2, surged 22% to $9.49 on Thursday — on pace for its largest single-day gain on record. The stock, up 46% this month ahead of the announcement, had been down 16% since its IPO. Coinbase and Robinhood, both planning U.S. tokenized-stock offerings when rules allow, each added about 2.6%. Bullish, the crypto exchange that struck a $4.2 billion deal to buy transfer agent Equiniti, gained about 6%.

What's next

The five-year window gives the SEC time to observe how tokenized NMS stocks trade onchain and how onchain and traditional markets interact, feeding into durable rules. The industry's pitch — 24/7 trading, instant settlement, fractional ownership, lower costs — will now get its first real U.S. test under a regulatory umbrella.

But the exemption is deliberately narrow, and the open questions are big. It remains to be seen whether major incumbents like the DTCC, Intercontinental Exchange, and Nasdaq will operate TSVs themselves or cede the lane to crypto-native firms, and liquidity fragmentation between onchain venues and traditional exchanges could create pricing and surveillance headaches. The issuer veto means adoption will be company-by-company, not a flood. The SEC has opened the door; how many walk through it will define the next five years of market structure.