SEC grants five-year exemption for tokenized securities venues in U.S.

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SEC five-year tokenized securities exemption

Highlights

SEC grants five-year conditional exemption for tokenized securities venues, enabling automated market makers and liquidity pools outside traditional exchange rules.
The exemption covers tokens representing direct security ownership, requiring dividend and voting rights for token holders and a 30-day issuer notice for third-party tokenizations.
Tokenized assets could reach a $5.5 trillion market by 2030, with the exemption accelerating compliant platform launches and following stalled Digital Asset Market Clarity Act progress in the Senate.

Five-year framework for tokenized trading

As first reported by CoinDesk, citing an SEC order and statement, tokenized securities venues can operate under a five-year conditional exemption if they meet the agency's requirements for listing and trading eligible tokenized securities. The exemption allows these platforms to use automated market makers and liquidity pools, while remaining outside the usual definition of an exchange under U.S. securities law.

The order applies to tokens that represent actual ownership of an underlying security rather than synthetic products. SEC Chairman Paul Atkins says the measure is meant to facilitate onchain trading of certain tokenized stocks, while requiring token holders to receive the same rights and privileges as traditional security holders, including dividend and voting rights.

The framework covers tokenization conducted by either the original issuer or a third party, subject to conditions. If a third party wants to tokenize a company's securities, the venue must give 30 days' notice and allow the issuer to object, which can block the process.

Market implications and policy backdrop

Platforms do not need a formal SEC designation before launching under the exemption. Instead, a firm that believes it satisfies the definition and conditions can notify the agency before starting tokenization operations, creating a faster route to market for compliant operators.

The SEC also excludes derivative-like security tokens and debt instruments that do not convey direct ownership, a limitation that may leave out some offshore-style products. Atkins says the temporary policy is intended to let firms operate in a permissioned environment while the commission considers further action and eventual rulemaking.

Tokenization remains a major focus across Wall Street, with banks, asset managers and market infrastructure firms testing whether blockchain can support faster settlement, round-the-clock trading and lower distribution costs. Citi analysts estimate tokenized assets could reach a $5.5 trillion market by 2030, underscoring why the SEC's move matters for the broader securities and digital assets sector.

The exemption comes days after the Digital Asset Market Clarity Act stalls in the Senate, where it falls short of the 60 votes needed to proceed. After that setback, Atkins says on X that the agency will act decisively within its statutory authority, and the commission follows a day later with the long-awaited tokenization relief.

Our earlier article on the Digital Asset Tax Certainty Act outlined how a bipartisan House Ways and Means Committee bill would modernize U.S. tax rules for cryptocurrencies and other digital assets. It detailed proposed changes affecting trading, mining and staking, including mark-to-market eligibility, safe harbors, clearer charitable treatment, and anti-abuse measures like wash-sale rules, while aiming to reduce reporting burdens for taxpayers and the IRS.

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