SEC OKs temporary pilot for tokenized U.S. stock trading

The U.S. Securities and Exchange Commission on Thursday approved a temporary innovation exemption that allows limited, permissioned trading of tokenized National Market System (NMS) stocks on certain onchain venues. The exemption is time-limited and applies only to designated, permissioned environments rather than public blockchains.

Under the exemption, Tokenized Securities Venues (TSVs) may offer trading through automated market makers and liquidity pools if they meet specified operational and reporting requirements. Venues must maintain transaction transparency, robust recordkeeping and technology safeguards before they may participate in the pilot.

TSVs will be required to publish regular U.S. dollar-denominated transaction data. Required disclosures include trade prices, trade sizes, timestamps, pool addresses, end-of-day pool sizes and daily volumes. The SEC also imposed limits on which ticker symbols and how much volume may trade under the pilot.

Commissioner Mark Uyeda described the Innovation Exemption as ‘designed to be controlled’, and noted that symbol and volume caps will apply. He said the framework is intended to produce data the agency can use to assess onchain securities trading and inform future rulemaking.

The SEC has asked market participants and the public to submit feedback, including data, case studies and information from live or test environments operating under the exemption. The agency will review that input alongside the collected transaction data to evaluate market-structure effects, risks and the effectiveness of the technological safeguards, and to decide whether to extend, modify or replace the temporary framework.

The exemption follows several months of internal work at the agency. Tokenized stocks are digital tokens that represent ownership of traditional equity shares and are recorded on a blockchain. Under the permissioned model approved for the pilot, trading will be limited to approved onchain venues that commit to the regulatory and reporting standards set by the SEC. The temporary pathway does not alter the application of U.S. securities laws; tokenized securities may still require registration unless an exemption applies.