The SEC has authorised qualifying tokenised US stocks to trade through permissioned automated market-maker pools, but the 32.5-hour trading week on NYSE and Nasdaq could leave those markets without a live reference price for most of the 168-hour week.
The five-year exemption applies to tokenised National Market System stocks that provide holders with the same rights and privileges as the equivalent conventional shares. It limits the number of symbols and trading volumes, while requiring public, auditable smart contracts on permissionless blockchains.
Trading venues must halt onchain activity whenever the primary exchange suspends trading in the underlying stock. However, normal overnight, weekend and holiday closures are treated differently, meaning tokenised markets can continue operating when NYSE and Nasdaq are not publishing live prices.
Marcin Kazmierczak, co-founder and chief operating officer of blockchain oracle provider RedStone, told crypto.news that the resulting gap could be more damaging than liquidity fragmentation or arbitrage problems.
Automated market makers price assets according to the holdings in their own pools. During normal US trading hours, arbitrage traders can buy a token in the cheaper market and sell it in the more expensive one, helping bring prices back together.
When the underlying share market is closed, that mechanism becomes weaker. A large trade in a relatively small onchain pool can move the quoted price, while investors cannot immediately trade the underlying share to complete the opposite side of the arbitrage.
Kazmierczak said greater activity would not remove the problem. Larger orders may create greater price impact, while the number of hours without a live primary-market reference remains unchanged.
Different tokens, different rights
The SEC framework also creates a distinction between fully backed ownership tokens and synthetic products already offered by offshore services. Kazmierczak said Robinhood’s Stock Tokens and Kraken’s xStocks use separate structures and are not covered by the exemption.
Investors may therefore encounter a conventional US share, a qualifying ownership token and a synthetic or wrapped product linked to the same company. Those instruments can trade under different rules and carry different rights.
“So you don’t just get tokenized versus traditional, you get two classes of tokenized product for the same underlying stock, priced differently, under different rules,” Kazmierczak said.
Coinbase’s stock-token report highlighted the differences. Its Base-native tokens linked to Apple, Nvidia, Meta and Alphabet are available to eligible non-US investors and represent beneficial interests held through an offshore special-purpose company and a regulated US broker.
Legal title generally remains with a trust, so wallet holders are not directly listed on the company’s shareholder register. Redemption and voting rights depend on identity, location, sanctions and anti-money laundering checks. Holders who have not completed the process can transfer tokens but cannot redeem or vote until approval.
Issuer objections and wider infrastructure
For third-party tokens, venues must notify the underlying company in writing and allow it to object before trading starts. AMC Entertainment CEO Adam Aron objected after Robinhood created an AMC-linked token without approval. Robinhood Assets (Jersey) Limited issued synthetic exposure to more than 190 companies without giving holders ownership, voting rights or standard shareholder protections.
“The products causing that fight are synthetic and won’t even be governed by today’s framework,” Kazmierczak said.
Approved venues must disclose operational, trading and affiliated-activity information. Certain liquidity providers using their own capital can also receive conditional relief from dealer registration. The exemption expires five years after publication, while the SEC is seeking comments on possible changes.
The issue reflects a broader clash between 24-hour blockchain activity and traditional financial infrastructure. In September, DBS and Citi completed a cross-border tokenised-deposit payment from Singapore to New York within minutes on a Saturday, although it did not establish whether every underlying obligation reached final legal settlement simultaneously. Fedwire does not operate continuously at weekends, leaving banks dependent on prefunded balances or extra liquidity until central-bank systems reopen.
“Price risk scales with data infrastructure. Consent risk scales with governance,” Kazmierczak said. “Neither is solved by this exemption alone, and both compound as volume grows.”
Kraken’s three xStocks vaults, accepting SPYx, QQQx and NVDAx, initially offered estimated net annual yields of 2%, 2% and 1.8%. They use deposited tokens as collateral for stablecoin loans before routing funds through cross-chain decentralised-finance strategies. Disclosed risks include liquidation, bad debt, smart contracts, cross-chain operations and liquidity; withdrawals generally require three days and may take longer during market stress.
