SEC approves limited trading of tokenized stocks on on-chain platforms.

The U.S. Securities and Exchange Commission (SEC) has approved a temporary, conditional exemption allowing limited trading of tokenized stocks on on-chain platforms. Commissioner Mark T. Uyeda issued a statement on the "Innovation Exemption." This temporary, conditional exemption permits limited trading of tokenized regulated stocks on specific on-chain venues called "Tokenized Securities Venues (TSVs)", with the goal of helping the commission better understand how such venues operate to inform future policy development. Uyeda noted that technological innovation often precedes rulebooks, and the commission’s objective should be to focus on outcomes and implement technology-neutral regulation—adapting to on-chain environments while upholding investor protection and market integrity. The exemption allows TSVs to temporarily avoid being deemed "exchanges" under the Securities Exchange Act when offering licensed trading of tokenized regulated stocks via innovative automated market makers and liquidity pools, provided they meet requirements including public notice, trading transparency, halt coordination, record-keeping, and technical safeguards. Structured as a controlled model, the exemption includes trading code restrictions and volume caps based on price limit tiers. It also mandates regular public disclosure of USD-denominated trading data, such as price, size, time, pool address, end-of-day pool size, and daily trading volume, to reduce information asymmetry and support monitoring and research. Additionally, the exemption provides tailored relief for certain market makers that supply liquidity with their own funds, offering regulatory clarity when they meet disclosure and record-keeping obligations.