The Securities and Exchange Commission announced an Innovation Exemption on Sept. 17 that creates a temporary pathway for tokenized National Market System (NMS) stocks to trade on‑chain. Under the exemption, venues can operate permissioned automated market maker (AMM) liquidity pools without having to register as a securities exchange, and third parties may tokenize stocks, but only if the tokens give holders the same rights and privileges as the underlying shares, including dividends and voting rights.
The rule excludes synthetic tokens that merely track a share’s price without conveying shareholder rights. Consequently, products such as Robinhood’s Stock Tokens and Kraken’s xStocks, which are structured as debt‑like instruments or lack full rights, fall outside the exemption. Robinhood’s chief executive Vlad Tenev welcomed the development, noting that tokenization is coming to America, while acknowledging that the firm’s current offering would need adjustment to comply.
Coinbase’s tokenized stock offering, which the company describes as fully backed and redeemable for underlying shares with integrated dividends, aligns closely with the exemption’s requirements, although its existing infrastructure is based on a central limit order book rather than the permissioned AMM model the SEC envisions. Coinbase does operate the Base network, which could be adapted.
Ondo Finance, which launched tokenized U.S. securities in June with custodial backing and on‑chain entitlements, says its model matches the SEC’s preferred structure. Ondo’s acquisition of Oasis Pro adds an SEC‑registered broker‑dealer, alternative trading system and transfer agent, giving it infrastructure across traditional and on‑chain markets.
Uniswap’s recent rollout of permissioned pools for its v4 protocol could serve as a foundation for venues seeking to satisfy the exemption’s AMM liquidity pool condition, provided they add KYC, record‑keeping and transparency measures to meet securities‑law obligations.
The exemption is set for five years, during which the SEC will evaluate whether tokenized stocks offer faster, cheaper or more useful alternatives to conventional brokerage positions. Chairman Paul Atkins said the period will allow the market to develop while the agency considers future rulemaking.
Market reaction to the announcement included a rise of over 10% in Bitcoin and Ether, and Uniswap’s UNI token gained more than 30% in the days following the news, according to Coingecko data.
