The US Securities and Exchange Commission has created a five-year regulatory route for trading tokenized stocks on public blockchains. However, the Innovation Exemption sets strict conditions for trading venues, liquidity providers and the tokens they support.
The framework favors US-operated, permissioned markets offering real shareholder rights. Meanwhile, several products that currently lead the tokenized stock market cannot enter the program without changing their legal and technical structures.
The exemption covers Tokenized Securities Venues that bring buyers and sellers together through automated market maker pools. These venues receive temporary relief from registering as national securities exchanges. Certain firms using their own capital to supply liquidity also receive relief from dealer registration.
However, every venue must operate as a US person and control who can access its pools. Federal rules against fraud and market manipulation continue to apply. SEC Chair Paul Atkins said the measure seeks to support new market systems while maintaining investor protection standards.
Public blockchains can host qualifying markets, but the AMM pools cannot remain fully open. Each venue must screen traders and liquidity providers before granting access. Therefore, existing pools on Uniswap, Raydium and other decentralized exchanges do not qualify automatically.
These protocols could create separate permissioned pools with identity checks and transfer controls. Raydium already supports permissioned AMMs, giving it some suitable infrastructure. Even so, its stock tokens must meet the SEC’s ownership and issuer requirements before a US venue can list them.
Eligible tokens must provide the same rights as traditional shares, including dividends and voting rights. The SEC does not permit synthetic products that simply follow a stock’s price without giving the holder ownership rights.
“Synthetic tokens offering exposure to a stock through a derivative or another product would not be permitted,” according to the regulatory conditions reported by Reuters. This requirement leaves several offshore products outside the US framework.
Securitize appears well placed because it already works with issuers, transfer agents and regulated financial firms. Its model focuses on tokens that represent legally recognized securities rather than instruments offering price exposure alone. Ethereum could also benefit because it hosts much of this regulated tokenization infrastructure.
Coinbase may gain through its US presence, compliance systems and Base blockchain. However, neither company receives automatic approval. Each venue must meet the exemption’s conditions, while every listed token must carry shareholder rights and follow the required trading controls.
Robinhood’s overseas stock tokens currently provide economic exposure through securities issued by a Jersey-based entity. Token holders do not directly become shareholders in the referenced companies. Kraken’s xStocks and several Ondo Global Markets products also use offshore structures that serve non-US users.
These providers must create US-compliant products if they want to use the exemption. That process may require new custody arrangements, shareholder record systems and issuer-approved token structures. Their strong positions on Solana, BNB Chain and Robinhood Chain do not remove those legal requirements.
Issuers also receive notice before a venue lists their tokenized shares and may object. This condition could limit listings involving companies that oppose third-party stock tokens. As a result, established market size will not decide which platforms lead the regulated US market. Compliance with ownership, access and issuer rules will determine which projects can enter.
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