The Securities and Exchange Commission established a five-year Innovation Exemption for tokenized National Market System stocks, permitting trading venues to operate on-chain without full securities exchange registration.
The Sept. 17 order mandates that tokenized stocks convey identical rights to underlying shares—including dividends and voting power. Trading venues must operate permissioned users and liquidity pools.
This framework eliminates synthetic stock tokens, which track price but strip shareholder rights. Robinhood's Stock Tokens and Kraken's xStocks do not meet the standard.
Coinbase appears positioned for compliance. Chief executive Brian Armstrong said on Sept. 14 that Coinbase had set the standard with tokens that are "fully-backed securities, redeemable for the underlying shares, with dividends integrated" and voting rights—not synthetic debt instruments.
Third parties can tokenize stocks without issuer affiliation, but issuers retain veto rights before trading begins.
Ondo Finance's head of global regulatory affairs, Peter Curley, noted the exemption provides temporary relief from exchange registration for venues facilitating tokenized NMS stock trading through permissioned AMM liquidity pools.
Commissioner Hester Peirce clarified the exemption targets one model and that the SEC remains open to considering other structures beyond this initial framework.
Uniswap's decentralized exchange infrastructure could host permissioned AMM liquidity pools for compliant tokenized stocks, positioning the protocol as a potential venue for on-chain stock trading.
