SEC creates five-year pathway for tokenized U.S. stocks

The SEC created a five-year temporary regulatory pathway for trading certain tokenized U.S. stocks on blockchain-based venues. The pathway provides conditional exemptions from exchange and dealer-registration rules. The SEC's Innovation Exemption removes eligible Tokenized Securities Venues from the legal definition of an exchange. The exemption also gives automated-market-maker liquidity providers relief from dealer-registration rules. The pathway allows tokenized National Market System stocks to trade while the SEC studies permanent rules. Eligible venues can use automated-market-maker liquidity pools. Tokenized shares must give holders the same rights as equivalent traditional stock. Those rights include dividends and voting rights. The exemption excludes synthetic tokens that only provide exposure to a stock. Robinhood CEO Vlad Tenev said tokenization would provide instant settlement. He also cited 24/7 trading and fractionalization by default. Tenev called the move a good day for U.S. innovation. Robinhood has already offered tokenized U.S. equities abroad. Robinhood expanded its Arbitrum-based Robinhood Chain in July to support 24/7 stock-token trading. The network also supports lending and collateral use across decentralized finance. Tenev said the United States was in the early stages of a global tokenization supercycle. He said the United States needed to move quickly. The Senate failed to advance the Trump-backed Clarity Act on Tuesday. SEC Chair Paul Atkins called the exemption a bridge toward durable rulemaking. Atkins said the SEC would use its existing authority after Congress failed to advance the bill. Reuters said crypto firms including Robinhood and Coinbase were preparing for U.S. tokenized-stock trading. The SEC said tokenization could improve liquidity. The SEC also said it could cut costs, support self-custody and enable faster settlement.