International platforms already offer tokenized equities, but not to U.S. users
The U.S. Securities and Exchange Commission on Thursday approved a temporary rule allowing the limited trading of tokenized stocks on certain platforms, a step the agency framed as part of the evolution of stock trading.
The Innovation Exemption sets guidelines for what the rule calls Tokenized Securities Venues and runs for five years. The commission described it as a test run for broader tokenization of the stock market and said a tokenized market could open the door to a 24-hour trading cycle.
“Technological innovation often outpaces rulebooks,” the SEC said in a statement. “At one point, securities transactions were predominantly conducted with paper certificates, but markets and regulators eventually became satisfied that electronic processes were more efficient. The goal should be to focus on outcomes and have technology-neutral regulation, which can effectively adapt to onchain environments while preserving investor protection and market integrity.”
The rule imposes two principal requirements. A stock token must be treated with the same rights as it would carry if held as a traditional equity, and the issuing companies must be allowed to decide whether their stocks can be traded as tokens.
“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 commission’s announcement came two days after the Senate on Tuesday voted to block the Clarity Act from advancing. That bill had sought to establish regulations for cryptocurrencies and other digital assets, including tokenized securities.
Tokenized stock trading already operates internationally. Coinbase, Robinhood, Gemini and Kraken offer offshore markets for tokenized equities but do not allow trading for U.S. users.