SEC Sets Conditional Five-Year Path for Tokenized U.S. Stock Trading

The Securities and Exchange Commission has granted temporary, conditional exemptions for some venues trading tokenized U.S. stocks, setting a limited path as Congress’s broader crypto bill remains stalled.

The Sept. 17 order lets certain permissioned venues trade tokenized National Market System (NMS) stocks through automated market makers and liquidity pools. It exempts eligible venues from the Exchange Act’s definition of an exchange and certain liquidity providers from the definition of a dealer. The relief expires five years after publication. Earlier coverage of the SEC’s tokenized-stock exemption details the order’s limited scope.

Token holders must receive the same rights and privileges as holders of equivalent traditional shares. If an unaffiliated third party tokenizes a stock, the venue must notify the issuer and wait at least 30 calendar days before trading begins. A timely issuer objection prevents the venue from offering that tokenized stock.

Each venue may offer up to 75 Tier 1 stock symbols, with tokenized trading capped at 0.25% of the underlying stock’s average daily share volume during the prior month. For Tier 2 stocks, the limits are 250 symbols and 2.5%. Affiliated venues’ symbols and trading volume count together toward those caps.

Separately, the SEC proposed two exemptions on Aug. 18 for certain investment-contract offerings involving crypto assets: a one-time offering of up to $5 million over four years and another allowing up to $75 million in each 12-month period, both subject to disclosure requirements. The proposal also includes a conditional safe harbor tied to an issuer completing or permanently ceasing promised managerial work. To qualify, an issuer must not make or intend new promises to perform essential managerial efforts and must file a transition report. The comment period closed Oct. 20, and the proposal remains pending.

The House passed the Digital Asset Market CLARITY Act of 2025 by 294-134 on July 17, 2025. On Sept. 15, the Senate failed to advance the bill in a 49-50 cloture vote on a motion to proceed, a procedural vote rather than a final vote on the legislation. The Senate’s failure to advance the bill left it stalled.

“Legislation remains indispensable to enacting ‘future-proofed’ rules of the road,” SEC Chairman Paul S. Atkins said Aug. 18.