The Securities and Exchange Commission has issued a five-year exemption letting platforms facilitate trading in blockchain-based tokenized stocks and securities, a decision that clears the way for round-the-clock equity trading.
The relief is conditional. Platforms must ensure holders of tokenized shares keep the same rights as holders of traditional stock, and companies must be given the chance to object to digital representations of their securities. The SEC granted liquidity providers a matching five-year exemption, freeing them from obligations expected of traditional dealers.
Regulators framed the carve-out as a necessity rather than a gift. Complying with existing federal securities law would require “potentially burdensome changes” to the business models of platforms planning to offer tokenized equities.
The SEC’s framing is that existing rules would force platforms into “potentially burdensome changes” to their business models, and that relief is therefore necessary rather than generous. “The Innovation Exemption is designed to resolve challenges that have prevented responsible innovation from taking root in the United States while providing investor protections and market integrity standards,” chair Paul Atkins said.
The appeal of tokenization is structural. Digital representations can trade continuously rather than during exchange hours, settle instantly without intermediaries, support fractional ownership and let investors hold securities in self-custody.
Coinbase, Robinhood and Gemini are among the exchanges positioned to move first, and each has been building toward tokenized products for years. Five years is a long runway in crypto, and long enough to test whether continuous settlement changes how equities actually trade or simply adds a parallel venue.
