The SEC created a temporary regulatory exemption this Thursday (17) that allows specific platforms to trade tokenized stocks through blockchain infrastructure. The regime will be valid for five years after its publication and exempts, under conditions, these venues from being treated as traditional exchanges under the Securities Exchange Act.
The so-called Innovation Exemption creates room for Tokenized Securities Venues (TSVs), platforms that will be able to bring together buyers and sellers through automated market makers (AMMs) and liquidity pools. Access must be permissioned, with defined criteria for participants.
The model brings mechanisms already common in the crypto market to stocks listed in the United States, but without removing the main obligations of federal securities laws. Rules against fraud and manipulation remain applicable, and platforms must meet transparency, recordkeeping and operational security requirements.
Tokenized stocks will have to preserve shareholder rights
The exemption does not cover assets that only offer synthetic exposure to a stock's price. To be traded within the regime, the token must represent a National Market System (NMS) stock and grant investors the same rights as the equivalent traditional stock, including dividends, voting and participation in residual assets in the event of liquidation.
When tokenization is carried out by a company not linked to the issuer of the original stock, the platform must notify the company before starting trading. The asset may only begin trading at least 30 days after receipt of the notification, and the issuer may object and prevent its inclusion in the venue.
The TSVs will also have to publicly disclose trading data denominated in dollars, updated within ten minutes, including price, size, time and information about liquidity pools.
SEC imposes volume limits during experimental period
The opening will have asset and trading limits. In Tier 1, which includes larger and more liquid stocks, each TSV may trade up to 75 symbols, with volume limited to 0.25% of the stock's daily average in the previous month. In Tier 2, the cap reaches 250 symbols and 2.5% of average daily volume.
The SEC says these limits seek to reduce the risk of price divergences between the tokenized version and the stock traded in the traditional market. If trading of the original asset is halted on its main exchange, the tokenized version must also stop.
The agency also granted temporary relief to certain liquidity providers, which may participate in these pools without being automatically classified as dealers, provided they meet the established conditions. Before starting operations, a TSV must publish a notice at least 30 days in advance and notify the SEC.
The measure is transitional. The SEC opened the regime for public comment and intends to use the data obtained during the experimental period to evaluate permanent rules for on-chain trading of securities in the United States.
