Morning Minute: SEC Approves ‘Innovation Exemption’ Moving Tokenized Stocks Forward

The Securities and Exchange Commission has issued an Innovation Exemption that permits certain trading venues to operate tokenized U.S. stock markets on public blockchains without registering as national securities exchanges. Under the new framework, platforms designated as Tokenized Securities Venues can facilitate trading using automated market makers and liquidity pools on permissionless chains, provided the tokens represent actual shares with attendant rights such as dividends and voting. The exemption takes effect immediately and will remain in place for five years. Instead of an application queue, firms that meet the criteria notify the SEC and may begin operations. The rule also provides separate relief from dealer registration for entities supplying liquidity to those markets. The exemption includes two important limits. It excludes synthetic tokens that only track a stock's price rather than conveying shareholder rights, and it preserves issuer control by allowing a company 30 days to object if an unaffiliated party tokenizes its shares, effectively stopping the tokenization if the issuer intervenes. Regulatory and industry developments converged around the announcement. The SEC hosted a roundtable on 24-hour trading an hour after granting the exemption, and S&P Global announced an acquisition of OpenZeppelin the same day, framing the deal as adding trusted data, benchmarks and risk assessment to onchain markets. The moves highlight parallel steps by regulators and private firms to build infrastructure and oversight as traditional financial assets migrate onto blockchain platforms.