The SEC on Thursday issued an order creating a regulatory pathway for certain trading venues to issue tokenized representations of publicly traded U.S. stocks. This five-year Innovation Exemption provides regulatory relief to trading platforms and liquidity providers under specific conditions, including that token holders must retain the same economic and voting rights as traditional shareholders, and that companies can object to having their securities tokenized. The order is part of the SEC’s Project Crypto initiative to bring America’s financial markets onchain, coming two days after the Clarity Act failed to advance in the Senate. Major platforms such as Coinbase, Robinhood, Gemini and Kraken have already launched offshore tokenized equity offerings, and this exemption could ultimately enable 24/7 trading.
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