SEC Hands Wall Street a Tokenized Tamagotchi: 5-Year Sandbox for 24/7 Onchain Stocks 📈

The U.S. Securities and Exchange Commission has issued a five-year innovation exemption authorizing limited trading of tokenized U.S. equities on certain onchain venues, the Commission announced in a press release. The conditional exemptive relief applies to Tokenized Securities Venues (TSVs) and permits trading of tokenized National Market System (NMS) stocks using permissioned automated market makers and liquidity pools.

SEC Commissioner Mark Uyeda said the framework is designed to be controlled, with symbol and volume limits, transaction transparency, recordkeeping requirements and technology safeguards attached to the relief. Under the terms, TSVs must regularly publish U.S. dollar-denominated transaction data, including prices, trade sizes, timestamps, pool addresses, end-of-day pool sizes and daily volumes. The exemption officially provides a pathway for traders to engage with these tokenized traditional assets on a 24/7 basis.

The order also solicited public comment on possible modifications to the exemptive relief. The SEC is seeking feedback on data, case studies and information from live or test environments to inform its evaluation of onchain securities trading. Commissioner Uyeda said the framework would give the agency data to assess the model and shape future rules.

The regulator had been developing the innovation exemption for several months. In February, SEC Chair Paul Atkins said the agency was weighing a temporary framework that would permit limited trading of tokenized securities through automated market makers while longer-term rules were being crafted. Atkins added at the time that the crypto agenda would proceed regardless of legislative developments.

The action follows the failed cloture vote on the CLARITY Act, a crypto market structure bill that did not advance in the U.S. House. The SEC had previously released the proposed "Reg Crypto" framework to provide additional regulatory guidance for digital assets.