SEC opens $77T U.S. market to tokenized trading

On Sept. 17 the Securities and Exchange Commission issued a five-year Innovation Exemption that permits certain regulated U.S. stocks to trade on permissioned blockchain venues. The action follows the Senate’s failure to advance the CLARITY Act and creates a regulated pathway for tokenized trading within the $77 trillion U.S. stock market.

The exemption establishes rules for Tokenized Securities Venues, which will match buyers and sellers through permissioned automated market makers and liquidity pools. Qualified venues receive temporary relief from exchange registration requirements and certain dealer-registration obligations for specified liquidity providers. The relief expires after five years so the agency can collect data on trading activity before considering permanent rules.

Venues must be U.S. persons, comply with Office of Foreign Assets Control sanctions rules and limit participation through permissioned access. Operators are required to keep records, maintain technology safeguards and publish transaction information including prices, trade sizes, timestamps, pool addresses and daily trading volumes. The framework includes symbol and volume caps and requires venues to enforce trading halts and other protections similar to those used on conventional exchanges.

The exemption applies only to tokenized National Market System stocks that represent actual shares. Tokens must carry the same dividend and voting rights as the underlying securities. Instruments that simply replicate price exposure without delivering share ownership are excluded. Issuers must be given an opportunity to object when a third party seeks to tokenize their stock, allowing companies to prevent listing on a venue.

In a statement, SEC Chair Paul Atkins wrote the agency was acting “within its statutory authority” to facilitate on-chain trading of certain tokenized stocks. Commissioner Mark Uyeda described the structure as deliberately constrained and noted tokenization could reduce reliance on intermediaries, shorten transaction lifecycles and lower operational costs while preserving investor protections.

Johann Kerbrat, general manager of Robinhood Crypto, called the exemption “a major step by the agency” and added it would allow liquid tokenized securities markets to develop onshore. The SEC held a roundtable on preparations for 24-hour U.S. equity trading in parallel with the exemption, part of ongoing discussion about extending market hours.

Industry data show tokenized stock trading activity occurring offshore. Token Terminal reported tokenized-stock market capitalization reached about $3.2 billion, up more than 1,200% over the past year, and that tokenized stocks generated roughly $15.75 billion in decentralized-exchange trading volume in the last 30 days, including about $2.95 billion on weekends when U.S. exchanges are closed. Analysis from Grayscale found a small share of tokenized-equity value is being used in lending and other on-chain finance, though on-chain lending activity has grown in recent months.

The five-year exemption gives regulators and market participants a time-limited test of whether permissioned blockchain venues can operate with investor protections similar to the traditional trading day. The agency will monitor trading patterns, liquidity behavior and operational resilience before deciding on longer-term regulation.