SEC introduces provisional framework enabling tokenized stock transactions in US markets
Through its Innovation Exemption program, the SEC has authorized restricted tokenized trading of US equities on blockchain platforms, implementing volume limitations and disclosure mandates.
The United States Securities and Exchange Commission has greenlit a provisional exemption that permits restricted trading of tokenized US equities on designated blockchain-based platforms.
Through the innovation exemption that received approval on Thursday, designated Tokenized Securities Venues (TSVs) are now authorized to facilitate permissioned transactions involving tokenized National Market System (NMS) equities.
The regulatory exemption encompasses transactions executed via automated market makers and liquidity pools, contingent upon meeting various stipulations such as transaction transparency protocols, comprehensive recordkeeping practices and technological security measures, according to SEC Commissioner Mark Uyeda. Additionally, TSVs are mandated to consistently disclose transaction information denominated in US dollars, encompassing pricing data, transaction volumes, time stamps, pool addresses, end-of-day pool valuations and daily trading volumes.
The Innovation Exemption is designed to be controlled
Uyeda noted, further explaining that limitations on symbols and volumes would be enforced. He indicated that this framework would provide the SEC with valuable data to evaluate onchain securities transactions and guide the development of future regulatory standards.
The regulatory agency is actively soliciting public commentary on the framework, requesting data submissions, case studies and insights from operational or testing environments.
The SEC had been working on the innovation exemption for several months. In February, SEC Chair Paul Atkins indicated the regulator was evaluating a temporary framework that would permit restricted trading of tokenized securities via automated market makers during the development of more comprehensive long-term regulations.