US SEC grants 5-Year exemption to launch tokenized stock trading on blockchain venues

In a major regulatory pivot toward digital assets, the U.S. Securities and Exchange Commission (SEC) has unveiled a five-year "Innovation Exemption" allowing blockchain-based platforms to facilitate the trading of tokenized U.S. stocks.

Announced under SEC Chair Paul Atkins, the conditional order grants qualifying Tokenized Securities Venues (TSVs) an exemption from many traditional exchange and dealer registration requirements.

The move clears a legal pathway for digital asset firms, brokerages, and alternative trading systems to integrate blockchain-backed equities directly into domestic capital markets.

Under the framework, the exemption strictly applies to genuine tokenized shares that carry the exact same economic rights and privileges as traditional equities including dividend distribution and voting capabilities.

The agency emphasized that "synthetic" derivative-based tokens that only mimic stock performance will remain prohibited.

Qualifying trading venues are relieved from heavy legacy exchange rules, while liquidity providers receive temporary relief from dealer registration mandates.

Platforms must notify public companies 30 days prior to listing their tokenized shares, and must halt listings if the underlying issuer objects.

Platforms would be required to notify companies before listing tokenized versions of their stocks, and would be barred from offering those products if the issuer objects, according to an SEC official.

"Synthetic" tokens offering exposure to a stock via a derivative or other product would not be permitted.

Proponents argue the framework could revolutionize market infrastructure by enabling around-the-clock (24/7) trading, instantaneous settlement, investor self-custody, and diminished transaction friction.

The administrative action is designed to reduce domestic demand for offshore synthetic token products and provide regulatory breathing room for blockchain innovation while long-term legislative efforts continue to navigate Capitol Hill.

The SEC said the exemption is necessary because platforms offering tokenized stocks may face substantial challenges complying with the federal securities laws "without potentially burdensome changes" to their business models.

"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," said SEC Chair Paul Atkins in a statement.

Prominent crypto players including Coinbase, have signaled that they plan to launch tokenized stocks in the United States when the rules allow.

Robinhood, Kraken and several ⁠other crypto exchanges already offer tokenized stocks overseas.

The new exemption comes just days after the U.S. Senate failed to advance comprehensive cryptocurrency legislation backed by President Donald Trump in a major blow for digital asset companies and Republicans who had championed the bill for month.