- Firms may begin publishing notices for tokenized stock venues in the coming months under the SEC’s five-year exemption.
- Eligible platforms can facilitate permissioned trading in tokenized U.S. stocks using liquidity pools on public blockchains.
- Issuers retain a 30-day objection period, while the SEC may adjust trading limits if they restrict commercial adoption.
Tokenized stock trading could begin taking shape under the SEC’s new Innovation Exemption as soon as next quarter, according to Taylor Lindman. The SEC Crypto Task Force chief counsel said firms may soon publish notices describing planned venues. Commissioner Hester Peirce said the exemption gives firms room to test commercially viable tokenized equity markets.
Firms Prepare Notices Under SEC Exemption
Lindman told Crypto In America that firms interested in the exemption are already approaching the agency. He expects the first required notices to appear in the coming months. The SEC issued a five-year conditional exemption last week.
It allows eligible platforms to facilitate permissioned trading in tokenized U.S.-listed stocks. Those venues can use automated market makers and liquidity pools on public, permissionless blockchains.
However, operators must publish notices and notify the SEC within one business day. Lindman described the model as more onchain finance than DeFi. Each venue must have an identified person or entity responsible for operating it.
Trading Limits And Issuer Veto Remain
Some crypto industry participants have questioned limits on stock numbers and trading amounts. They have argued those restrictions could make commercial operations difficult. However, Peirce said the caps remain high enough for firms to conduct substantial experimentation.
She added that the SEC could revisit them if they become an obstacle. The exemption also gives public companies 30 days to object before unaffiliated tokenized shares reach a venue. An objection blocks those shares from trading there.
Peirce said issuers she has spoken with show strong interest in tokenized markets. She also expects broad interest from companies considering the model.
SEC Sees Path Toward Linked Markets
Peirce said the five-year exemption serves as a bridge toward longer-term rules. If venues gain traction, additional requirements could apply after reaching specific trading thresholds. She compared that possible framework with existing rules for alternative trading systems.
Meanwhile, she said decentralized stock trading could create wider regulatory questions. The SEC’s recent roundtable on 24/7 trading included Wall Street representatives discussing blockchain-based markets. Peirce said tokenized venues could eventually connect with traditional markets.