The Securities and Exchange Commission opened a five-year pathway for tokenized National Market System stocks on-chain, creating a specific framework for compliant trading. The Sept. 17 announcement drove UNI token gains above 30 percent, with Bitcoin and Ethereum also rising over 10 percent.
The Innovation Exemption allows certain venues to trade tokenized NMS stocks without full securities exchange registration. The temporary relief permits third parties to tokenize these stocks under precise conditions.
Tokenized stocks must grant holders identical rights to underlying shares, including integrated dividends and voting rights. Trading venues must permission both users and liquidity pools. The SEC order specifically references permissioned AMM liquidity pools as a compliant mechanism for on-chain NMS stock transactions.
The framework explicitly excludes synthetic stock tokens. Any token tracking a share's price without conveying actual shareholder rights does not qualify. Issuers also retain the ability to prevent their stock's tokenization.
Robinhood's Stock Tokens and Kraken's xStocks, in their current synthetic forms, fall outside compliance requirements. Both platforms must restructure their models to align with SEC mandates.
Coinbase appears positioned within the new rules. Chief executive Brian Armstrong stated on Sept. 14 that Coinbase had "set the standard" with tokenized stocks that are "real fully-backed securities, redeemable for the underlying shares, with dividends integrated" and include voting rights.
Uniswap's UNI token climbed significantly following the announcement. The protocol's AMM structure positions it as a potential key venue for compliant tokenized stock trading through permissioned liquidity pools.
Robinhood CEO Vlad Tenev said, "Tokenization is coming to America," after the SEC's announcement. Peter Curley, head of global regulatory affairs at Ondo Finance, noted that the Sept. 17 order provides temporary exchange registration relief for venues trading tokenized NMS stocks through permissioned AMM liquidity pools.
SEC Commissioner Hester Peirce clarified that the exemption applies to one specific model for tokenized securities trading. She added that the SEC remains open to considering alternative models, indicating potential for future evolution in tokenized asset regulation.
Protocols and platforms operating under the exemption must ensure strict adherence to shareholder rights and permissioned access requirements.
