The SEC Just Created a Five-Year Sandbox for Trading Tokenized Stocks on Public Blockchains
Key Summary
The SEC has created a five-year sandbox for trading tokenized stocks on public blockchains, allowing registered broker-dealers and alternative trading systems to trade tokenized U.S. stocks without registering as national securities exchanges. The exemption is narrow, with venues capped at 75 individual securities and aggregate trading volume limited to 0.25% of average daily volume for any listed security.
SEC Launches 5-Year Sandbox for Tokenized Stocks on Public Blockchains
Introduction
The SEC has created a five-year sandbox for trading tokenized stocks on public blockchains, allowing registered broker-dealers and alternative trading systems to trade tokenized U.S. stocks without registering as national securities exchanges. This exemption is designed to be narrow, with venues capped at 75 individual securities and aggregate trading volume limited to 0.25% of average daily volume for any listed security.
Eligibility
The SEC has explicitly named the qualifying blockchains as Ethereum, Solana, and BNB Chain. This means that only venues operating on these blockchains can take advantage of the exemption.
Structure
The structure of the exemption reveals the SEC's internal logic. The agency is not opening a general sandbox for all types of tokenized securities, but rather is focusing on a specific type of security - real ownership of actual securities issued and recorded on-chain.
Conclusion
The creation of this five-year sandbox is a significant step forward for the development of tokenized securities in the US. It allows for innovation and experimentation, while also providing a clear framework for regulatory oversight.