SEC grants five-year exemption for trading tokenized stocks on crypto platforms

On Thursday, the U.S. Securities and Exchange Commission introduced a five-year Innovation Exemption aimed at tokenized stock trading. The rule relaxes many of the requirements that apply to traditional exchanges such as Nasdaq and NYSE, and also waives dealer registration for liquidity providers dealing in tokenized securities. Firms must seek approval from a company before listing a tokenized version of its stock, and they are barred from proceeding if the issuer objects.

The exemption does not cover synthetic tokens that provide stock exposure through derivatives. Regulators argue the measure balances investor protection with the need to foster responsible innovation. Crypto firms, including Coinbase, have indicated plans to launch tokenized stocks in the United States once the framework is in place, while platforms like Robinhood, Kraken and others already offer such products abroad.