SEC grants five-year innovation exemption for tokenised securities venues

The U.S. Securities and Exchange Commission has issued a blanket five-year conditional exemption allowing blockchain-based trading venues to list and trade tokenised securities without registering as a formal exchange under U.S. securities law. Under the order, these so-called tokenised securities venues (TSVs) may operate automated market makers and liquidity pools, managing pools of assets through algorithm-driven automation, provided they comply with the SEC’s stated conditions and give notice before launching operations.

The exemption carves out a clear ownership requirement: only tokens that confer genuine ownership of the underlying stock, including dividend rights and voting rights, are eligible. Synthetic tokens structured as derivatives are explicitly excluded, a boundary that appears to place several offshore products outside the permitted framework. Tokenisation may be initiated either by the issuer or by a third party, though issuers retain a veto right over third-party tokenisation of their own securities.

SEC Chairman Paul Atkins framed the move as bringing U.S. capital markets into the digital age, while acknowledging its provisional character. He stated that the exemption must be followed by durable rulemaking to give onchain markets a lasting regulatory foundation. The exemption had been in development for more than a year and was released shortly after a crypto market structure bill failed in the U.S. Senate, giving the agency’s administrative action added significance as a near-term policy vehicle.