The U.S. Securities and Exchange Commission has granted a temporary, conditional exemption for certain venues trading tokenized shares. The order, issued September 17, lets qualifying tokenized securities venues use permissioned automated market makers and liquidity pools without being treated as exchanges under a particular provision of federal securities law. The relief is set to expire five years after publication.

The decision covers tokenized National Market System stocks, meaning blockchain-based versions of shares in the regulated U.S. market. Venues must operate within limits on the number of symbols and trading volume. They also must verify that a token holder receives the same rights and privileges as a holder of the equivalent conventional share. The order therefore draws a distinction between a token representing real stock ownership and an instrument that merely tracks its price.

Further conditions require public, auditable smart contracts on a permissionless blockchain. A venue must halt token trading when the underlying stock is halted on its main exchange. Where an unaffiliated third party tokenizes an issuer's shares, the venue must give that issuer notice and a chance to object. A related exemption addresses certain liquidity providers using their own capital in the approved pools.

The SEC is seeking public comments while it considers longer-term rules. The order does not make every tokenized share or trading platform automatically eligible; operators have to satisfy its conditions. For companies building onchain equities, the change offers a defined path to test a specific market structure. Its most consequential feature may be the insistence that trading technology preserve ordinary shareholder rights.