Why this investment bank expects little demand for tokenized stocks despite SEC’s new trading rules
TD Cowen expects limited demand for tokenized stocks despite new SEC rules opening a path for trading outside traditional markets.
The Securities and Exchange Commission (SEC) opened a new path for tokenized stock trading in the U.S. last week, adding momentum to a technology that has swept through financial markets over the past year. TD Cowen, however, doesn’t expect investors to rush through the door.
The agency’s new Innovation Exemption creates a five-year framework for qualifying tokenized securities venues to operate automated market maker pools without registering as exchanges.
Certain liquidity providers can also avoid dealer registration, subject to conditions. The move came just days after the Clarity Act failed to advance, leaving broader crypto market structure legislation stalled.
The SEC has also placed tight limits on its experiment. Tokens must represent NMS stocks and preserve the economic interest, dividends, voting rights and liquidation rights attached to the underlying shares. Third-party tokenizers must notify a company before trading its stock, giving the issuer 30 days to object. Trading volume is capped.