On September 17 local time, the U.S. Securities and Exchange Commission (SEC) granted blockchain-based venues trading tokenized U.S. listed stocks a five-year conditional exemption from the securities-exchange registration requirement. A tokenized listed stock represents ownership of an existing share through a token on a blockchain. Venues meeting the specified conditions may operate without registering as securities exchanges through September 17, 2031.
Eligible tokens must carry the same rights as the underlying shares, including dividends and voting rights; synthetic products that merely track share prices are excluded. Even if a venue uses a public blockchain, only authorized participants who have passed identity and sanctions screening may trade. The exemption applies to trading previously issued shares and does not permit a venue to issue new securities.
To trade shares tokenized by a third party unaffiliated with the issuer, a venue must notify the issuer in writing. Trading may begin only after at least 30 days have passed since the issuer received the notice; if the issuer objects in writing during that period, the shares cannot be traded on that venue.
Limits also apply to the number of stocks and trading volume. If a venue exceeds the volume limit for the same stock a second time after an initial breach, it must halt trading in that stock for three months; volume across affiliated venues is combined when calculating the limit. Trading in a tokenized stock must also halt if trading in the underlying stock is halted on its listing exchange. A venue operating under the exemption is neither registered with nor approved by the SEC and must say so in its disclosures.