The first venues for trading tokenized stocks could begin taking shape as early as next quarter under the U.S. Securities and Exchange Commission’s new innovation exemption, SEC Commissioner Hester Peirce and Taylor Lindman, chief legal counsel of the SEC crypto task force, said in a joint interview.
Required notices may offer the first public signal
Lindman said regulators expect companies to publish the required notices in the coming months, laying out how they plan to operate. Those filings would provide the first public sign of which firms intend to enter the new market.
He said there will likely be a delay between the release of the framework and the first company notices, with the timing possibly landing sometime next quarter.
Five-year conditional relief is already effective
Last week, the SEC issued a five-year conditional exemption allowing eligible platforms to facilitate permitted trading of tokenized versions of U.S.-listed stocks on public permissionless blockchains through automated market makers and liquidity pools.
The relief is already in effect. Even so, venues must publish a notice describing their operations and notify the SEC within one business day after publication.
Lindman calls the structure onchain finance, not DeFi
Lindman said the model is better described as onchain finance than DeFi. In his account, each venue must have a clearly identified individual or entity responsible for operating the platform and meeting the exemption’s conditions.
Peirce addresses concerns about operating limits
Peirce responded to industry concerns over caps on the number of stocks and trading volume, saying the limits are set high enough to support viable operations.
She described the restrictions as an iterative way to bring tokenized stocks into a regulated market. The five-year relief, she said, is not permanent and is meant to serve as a bridge to a longer-term rulemaking framework.
Issuers still get a 30-day window to object
Another potential constraint is issuer veto rights. Before a venue can offer a tokenized version of a listed company’s stock created by an unaffiliated third party, it must give the issuer 30 days to object.
Peirce said she does not expect broad opposition.