SEC Grants Innovation Exemption for Onchain Trading of Tokenized Stocks

The U.S. Securities and Exchange Commission has issued a five-year exemptive relief allowing the onchain trading of tokenized NMS stocks that are 1:1 backed by underlying assets. Under the new "Innovation Exemption," Tokenized Securities Venues (TSVs) and certain liquidity providers are exempt from registering as exchanges or dealers under the Securities Exchange Act of 1934, provided they meet specific requirements including permissioned participation, public disclosure, and anti-fraud compliance. The relief is limited to tokenized shares that carry full traditional rights, such as voting and dividends.