US SEC Sets Four Conditions for Tokenized Stocks Onchain Trading, Bans Trading of Synthetic Tokenized Stocks

Odaily News: U.S. Securities and Exchange Commission (SEC) Chairman Paul S. Atkins stated that the SEC today adopted an "innovation exemption" to provide temporary, conditional regulatory relief for certain tokenized NMS stocks to conduct onchain trading. Qualifying tokenized securities trading venues (TSVs) may be exempt from the "exchange" definition under the Securities Exchange Act, and qualifying liquidity providers may be exempt from the "dealer" definition. Atkins stated that the exemptions are subject to four key conditions:

First, the TSV must be a U.S. entity and comply with the economic and trade sanctions regulations of the U.S. Office of Foreign Assets Control (OFAC);

Second, a permissioned access system must be implemented, allowing only qualifying participants to trade tokenized NMS stocks;

Third, trading of synthetic tokenized stocks is prohibited; the relevant tokenized stocks must be tokenized by the underlying stock issuer or an unaffiliated third party, and holders must enjoy the same rights as traditional securities, including dividends and voting rights;

Fourth, issuers have the right to object to and prevent their securities from being traded on the TSV, and the anti-fraud and anti-manipulation provisions of federal securities laws continue to fully apply to the relevant securities activities.