The U.S. Securities and Exchange Commission has granted tokenized securities venues five years of conditional relief to trade tokenized U.S. stocks through permissioned automated market makers and liquidity pools.
The U.S. Securities and Exchange Commission said in its order that Tokenized Securities Venues, or TSVs, may use permissioned automated market makers and liquidity pools to facilitate trading in tokenized National Market System stocks.
Issued as conditional exemptive relief, the measure will remain available for five years after publication. The agency also requested public comments on possible changes to the framework while it studies how blockchain-based trading can operate under U.S. securities laws.
Eligible platforms will receive relief from several rules that apply to national exchanges such as the Nasdaq and New York Stock Exchange. Liquidity providers working with tokenized shares will also receive temporary relief from certain dealer-registration requirements, according to the SEC.
Rather than creating a new class of securities, the order covers blockchain-based representations of existing NMS stocks. A tokenized share must carry the same rights and privileges as the traditional share it represents, preventing venues from using the exemption for products that merely track a stock’s price without providing ownership rights.
Synthetic tokens that offer stock exposure through derivatives do not qualify, according to an SEC official cited by Reuters. Before listing a tokenized version of a company’s shares, a venue must notify the issuer and cannot proceed if the company objects.
SEC Chair Paul Atkins described the exemption as a step toward moving U.S. capital markets into the digital age while the Commission considers additional rules for onchain trading.
“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,” Atkins said.
Under the order, each approved venue will face limits on the number of stock symbols it can support and the amount of trading activity it can process. The restrictions give the SEC a controlled setting in which to observe onchain stock markets without opening every listed security to unrestricted blockchain trading.
Smart contracts used by a TSV must be public and auditable. Venues must deploy the contracts on a public, permissionless distributed ledger, even though the trading system itself will operate in a permissioned environment.
Trading controls must also follow the underlying U.S.-listed stock. If a primary listing exchange stops trading a company’s shares, the TSV must halt trading in the related tokenized stock at the same time. The requirement prevents an onchain venue from continuing to price or trade a security while its main market is closed because of pending news, volatility, or a regulatory issue.
Public disclosure forms another condition. Each TSV must publish information about its operations, its trading activity and transactions involving affiliated parties. The SEC said the disclosures form part of the investor-protection and market-integrity standards attached to the exemption.
For American investors, the ownership requirement is central because tokenized stock products do not always provide a legal claim on the underlying company. Some products offered outside the United States use contractual arrangements or derivatives to reproduce a share’s price rather than giving the holder the voting, dividend, and disclosure rights attached to registered stock ownership.
Coinbase CEO Brian Armstrong addressed that distinction before the exemption was issued. On Sep. 14, crypto.news reported that Armstrong had called for full backing from real securities as Coinbase prepared to connect international investors with a U.S. equity market valued at more than $70 trillion.
The exemption gives platforms such as Coinbase and Robinhood a defined route for launching tokenized U.S. equities if they satisfy the SEC’s conditions. Both companies already serve American customers through regulated entities, but the order does not automatically approve either platform or remove the need to comply with its limits.
Tokenized securities could allow eligible investors to trade outside normal exchange hours, settle transactions faster, and hold fractional interests. The SEC has also identified self-custody as a possible feature, though the exact services available will depend on each venue’s structure and regulatory status.
Traditional exchanges have begun testing related systems. In March, Nasdaq secured SEC approval to trial tokenized stock trading, allowing blockchain-based and conventional shares to trade within the same order book while retaining identical shareholder rights.
At the same time, the Commission has been reviewing the recordkeeping systems behind securities ownership. On Sep. 1, the agency proposed its first major transfer-agent rules overhaul in decades, including provisions that could allow blockchain records to serve as official evidence of ownership.
Transfer agents maintain the formal register that identifies a company’s shareholders. Under that proposal, a blockchain entry could become part of the recognized ownership record rather than operating only as a separate digital representation. The Commission provided a 60-day public-comment period for that rulemaking.
Outside conventional exchanges, Hyperliquid already supports stock-linked markets through its HIP-3 system. Kraken parent Payward has also confirmed plans to bring HIP-3 markets to its users, giving traders access to perpetual contracts linked to several assets. Such derivatives remain separate from the fully backed tokenized shares covered by the SEC exemption.
The order arrived days after the U.S. Senate failed to advance the CLARITY Act in a 50–49 procedural vote, short of the 60 votes needed to proceed. Following the failed Senate procedural vote, attention turned to the SEC and Commodity Futures Trading Commission for agency-level action on digital-asset rules.
Atkins said before the exemption that the SEC’s crypto agenda would continue even if Congress did not pass the market-structure bill. The Commission had also introduced its proposed “Reg Crypto” framework, which would provide a fundraising route for eligible crypto projects under defined disclosure and compliance rules.
Congressional inaction does not give the SEC authority to settle every question covered by the CLARITY Act, including the division of oversight between the SEC and CFTC. Exemptive orders can, however, provide limited relief under existing securities laws when the Commission determines that firms cannot use a new market structure without costly changes to their business models.
Alongside the five-year order, the SEC has asked market participants to comment on every part of the exemption and suggest possible revisions. The Commission also scheduled a Sep. 17 roundtable on preparations for 24-hour U.S. equity trading, covering overnight operations, market resilience and the technical demands of extending trading hours.
