Real stocks are finally coming on blockchain. Here’s how the SEC wants it to work
Reported by CoinDesk · AI-assisted summary by ChikoCorp AI News Desk
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Summary
The U.S. Securities and Exchange Commission (SEC) has introduced an "innovation exemption" allowing qualifying Tokenized Securities Venues (TSVs) to trade real U.S. stocks on public blockchains using smart contracts and liquidity pools without registering as national securities exchanges. This five-year experimental framework permits trading tokenized shares that retain traditional rights such as voting and dividends, excluding synthetic products that only track stock prices. The SEC imposes limits on trading volume and listings, requires permissioned access and public, auditable software, and gives companies veto power over third-party tokenization of their shares.
Why it matters
The SEC's exemption enables a new market structure for trading stocks that uses blockchain-based liquidity pools governed by smart contracts, potentially improving settlement, interoperability, and programmability of securities markets. It allows banks, brokers, and crypto firms to experiment with decentralized finance (DeFi) technology under regulatory oversight. This development could foster innovation while maintaining investor protections and compliance, but the source does not provide a detailed analysis of broader market or policy impacts.
Key context
Previously, markets for tokenized stocks had to comply with regulations designed for traditional exchanges like NYSE or Nasdaq. The new SEC policy creates a distinct regulatory category where tokenized stocks can trade in a permissioned environment on public blockchains using automated market makers (AMMs) and liquidity pools. The framework also requires that tokenized stocks mirror the rights of their traditional counterparts, distinguishing them from synthetic or derivative products. This regulatory move follows the failure of the Clarity Act in Congress, prompting the SEC to act unilaterally.
Key numbers and entities
SEC Chair Paul Atkins announced the exemption. Jamie Selway, SEC’s director of trading and markets, provided details including volume caps: 75 most liquid stocks can have up to 0.25% of average daily volume traded on TSVs; a second tier of 250 stocks can trade up to 2.5% average daily volume. Tesla's average daily volume is about 40 million shares, allowing up to approximately 100,000 tokenized shares or $36.6 million daily volume under the cap. Joris Delanoue, CEO of Fairmint, and Carlos Domingo, CEO of Securitize, provided commentary on the policy. AMC Entertainment and Robinhood were cited due to a recent dispute relating to stock tokenization.
What remains unclear
The source does not specify detailed criteria for platform qualification as TSVs or the exact enforcement mechanisms for the veto rights companies have over third-party tokenizations. It is also unclear how the SEC will monitor compliance with permissions and volume limits and what specific investor access restrictions apply. The longer-term regulatory and market consequences after the five-year exemption period remain undetermined.