Platforms can run pool-based trading in tokenized US shares without registering as exchanges. In return the tokens must carry full shareholder rights, volumes are capped, and every trade goes public.
The US Securities and Exchange Commission has granted a five-year exemption for limited trading of tokenized US exchange-listed stocks on qualifying blockchain platforms. Its Innovation Exemption, announced September 17, covers trading through automated market makers and pools of assets supplied for trading, without the platform having to register as a national securities exchange. Certain firms that put their own capital into those pools get conditional relief from being treated as dealers.
The decision followed the Senate's failure to advance the Digital Asset Market Clarity Act two days earlier. SEC Chairman Paul Atkins presented it as action the agency could take under its existing authority while Congress had yet to pass that broader crypto legislation.
According to CoinDesk, a platform needs no individual designation from the SEC: it qualifies as one of the agency's Tokenized Securities Venues by meeting the conditions and filing a notice. It must screen who may trade and halt a token the moment the underlying stock stops trading on its primary exchange.
The tokens themselves have to be the real thing. Holders get the dividends and votes that come with conventional shares, and tokens that merely track a price confer no ownership and are excluded. A venue that wants to list a third party's token of a company's stock must notify the company 30 days ahead, CoinDesk reported, and the company can block the listing.
Caps apply to trading volumes and to the number of symbols a venue may offer. A venue's smart contracts must be public and auditable, on a blockchain anyone can join, and it discloses each trade's price, size and time at regular intervals, along with daily volumes. The rules against fraud and market manipulation are not waived.
Atkins called the arrangement a bridge to permanent rules, and the SEC is asking for comment and data to shape them. CoinDesk noted that a future commission could reverse the exemption.