The US Securities and Exchange Commission (SEC) has approved a five-year framework allowing regulated US shares to be traded on blockchain-based platforms, opening a potential route into the $77 trillion US stock market.
The move came two days after the Senate failed to advance the CLARITY Act, a wide-ranging bill intended to establish rules for digital assets and define regulatory responsibilities. The motion was defeated 49-50, falling short of the 60 votes required.
SEC Chair Paul Atkins said the agency was acting “within its statutory authority” to enable on-chain trading in certain tokenised stocks.
The Innovation Exemption creates a temporary regime for Tokenized Securities Venues (TSVs), where buyers and sellers can trade through permissioned automated market makers and liquidity pools. Eligible venues will receive relief from being treated as exchanges under the Securities Exchange Act, while some liquidity providers using their own capital may receive exemptions from dealer-registration requirements.
The five-year period will allow the SEC to gather trading data before deciding whether a permanent framework is needed.
Commissioner Mark Uyeda said the system had been deliberately limited. It includes restrictions on the number of securities and trading volumes, as well as rules on transparency, trading halts, recordkeeping and technology safeguards. Venues must publish prices, trade sizes, timestamps, pool addresses and daily volumes.
The announcement coincided with an SEC roundtable about preparations for 24-hour US equity trading. Atkins said economic and corporate news no longer fits neatly within normal market hours and that investors increasingly want to adjust their positions as events unfold. He also said tokenisation could improve inventory management and reduce settlement failures.
Uyeda has argued that blockchain-based securities could reduce reliance on intermediaries, shorten transaction processes and lower operating costs, provided existing investor protections remain in place.
Robinhood Crypto General Manager Johann Kerbrat said: “This is a major step by the agency and will allow liquid tokenized securities markets to develop onshore. Smart regulation accelerates innovation.”
Robinhood, Kraken and Coinbase already offer tokenised US equity products to customers outside the US. Token Terminal data shows the sector’s market capitalisation has reached a record $3.2bn, up 1,219.3% in a year. Decentralised-exchange trading volume totalled $15.75bn over the past 30 days, including $2.95bn at weekends.
Weekend turnover rose 4.4-fold in three weeks, from $360m to $1.6bn. The number of tokenised-stock holders reached 3.7 million, an annual increase of 4,247.8%, although that figure counts on-chain holders rather than necessarily individual investors.
Tokenised stocks worth $247.8m are now deployed in decentralised finance, a rise of 1,960.8% over the year. However, Grayscale estimated in late August that only about 5% of the market was being used in on-chain finance, with trading and continuous access still the main attractions.
Use in lending protocols including Solana-based Kamino and Jupiter has increased roughly tenfold over the past year. Grayscale said clearer rules could allow tokenised shares to be used more widely as collateral and enable the security and payment sides of a transaction to settle together on-chain.
The exemption applies only to tokenised National Market System stocks that represent genuine securities. Holders must receive the same dividend and voting rights as traditional shareholders; synthetic products that merely track prices are excluded.
Issuers can also object when an unaffiliated party seeks to tokenise their shares. Venues must be US persons, comply with Office of Foreign Assets Control sanctions rules and use permissioned access.
Trading caps may limit activity overnight and at weekends, when thinner liquidity can mean wider spreads and sharper price movements. Atkins said round-the-clock markets must retain the protections available during normal hours, while deeper activity may be needed before services such as securities lending and prime brokerage can operate effectively overnight.
