Tokenization is moving faster than Washington
Regulatory clarity is not simply a legal or political issue, argues former New York Governor Andrew Cuomo. It is an economic one.
Three months ago, bringing U.S. equities onto blockchain-based markets still looked more like a vision for the future than an immediate question of market structure. On Sept. 17, that changed. The Securities and Exchange Commission created a temporary framework for limited trading of tokenized U.S. stocks on qualified onchain venues — moving tokenization another significant step from the financial frontier toward the regulated mainstream. I have had a close view of that transition as co-chair of a joint venture between Intercontinental Exchange, the parent company of the New York Stock Exchange, and OKX that is building infrastructure for tokenized and digitally native financial products.
The SEC issued what it calls an “Innovation Exemption,” creating a temporary, conditional framework under which qualified venues, using automated market makers and liquidity pools, can trade certain tokenized stocks listed on American exchanges without registering with the SEC. The exemption lasts five years and permits experimentation with blockchain-based trading while imposing restrictions intended to protect investors.
That is a significant development. But its greater significance may be what it tells us about the pace of technological change.
But the underlying technology and the markets developing around it will continue to advance regardless of the legislative calendar.