SEC rolls out long-awaited 'innovation exemption' for tokenized securities venues
The U.S. Securities and Exchange Commission issued a blanket 5-year exemption for listing and trading tokenized securities without registering as an exchange.
Blockchain-based trading venues that want to list and trade tokenized securities received fresh permission and an explanation of how to do that from the U.S. Securities and Exchange Commission on Thursday.
The SEC unveiled its long-awaited tokenization exemption on Thursday morning, formally granting these so-called "tokenized securities venues" (TSVs) the ability to provide automated market makers and liquidity pools that, in turn, can be used to trade tokenized securities. These companies will have a five-year "conditional exemption" from having to meet the definition of an "exchange" in U.S. securities law, according to the SEC.
Under the SEC's watch, the venues will manage pools of necessary assets and use algorithm-driven automation to manage the activity of buyers and sellers. Thursday's order sets paths for tokenization by either the stock issuer or a third party, under certain conditions.
Global asset managers, banks and market infrastructure firms have been pushing deeper into the technology, betting that it could eventually bring faster settlement, around-the-clock markets and lower costs while making securities easier to distribute and use as collateral. It's potentially a huge opportunity for firms: Citi analysts estimated that tokenized assets could grow into a $5.5 trillion market by 2030.