U.S. SEC allows limited trading of tokenized stocks

The U.S. SEC has approved a temporary conditional exemption, described as an innovation exemption, allowing limited trading of tokenized U.S. stocks in on-chain environments, Unfolded reported. The measure lets regulated traditional financial institutions and crypto platforms test and operate on-chain stock trading in a temporary sandbox format until formal rules are established. Only physically backed tokenized stocks carrying the same rights as conventional shares, including dividend and voting rights, are eligible for the exemption, while synthetic assets designed only to track prices are strictly excluded. If a third party tokenizes a stock, a security token exchange, or TSV, must notify the issuing company, and trading is barred if the company exercises its veto within 30 days. Limits also apply to the number of stocks each TSV can handle and to the share of daily trading volume, with the measure taking effect immediately for up to five years.