The U.S. Securities and Exchange Commission (SEC) has introduced an 'Innovation Exemption' allowing qualified Tokenized Securities Venues (TSVs) to trade tokenized U.S. stocks on permissionless blockchains. This initiative follows the recent failure of the Clarity Act to advance in the Senate.
Under the new rules, TSVs can utilize automated market makers and liquidity pools without registering as national securities exchanges. The exemption takes effect immediately and remains valid for up to five years. It applies exclusively to tokenized stocks that grant holders full rights, such as voting and dividends, explicitly excluding synthetic assets.
Participation in these venues is restricted to eligible users and liquidity providers. While firms do not need individual SEC approval to operate, they must notify the Commission and adhere to specific volume limits for both the number of stocks offered and daily trading activity.
The framework grants public companies the right to object to the unauthorized tokenization of their shares. Issuers have a 30-day window to block third-party tokenization attempts. The SEC views this exemption as a temporary measure while it works toward establishing permanent regulations for the sector.
