re: Official CryptoTalk Thread

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The Senate spent more than a year trying to write one giant answer to crypto. On Tuesday, it failed to even begin debating that answer. Forty-eight hours later, the SEC did something much more practical: it created a temporary legal path for actual U.S. stocks to trade on public blockchains.

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The SEC’s new Innovation Exemption allows approved Tokenized Securities Venues to trade tokenized versions of National Market System stocks using automated market makers and liquidity pools. These are not supposed to be casino chips that merely track the price of Apple or Nvidia. The tokenized shares have to carry the same economic rights as the traditional security, including dividends and voting rights, and issuers can object to having their stock traded this way. The venues themselves remain permissioned and regulated, but the smart contracts can live on public, permissionless blockchain infrastructure.

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The exemption itself is intentionally limited. There are restrictions on which securities can trade, volume limits, disclosure requirements and operational safeguards. Trading has to stop when the underlying stock is halted. Issuers get notice and can object. The relief is temporary rather than some permanent rewrite of American securities law. The SEC is basically creating a controlled environment where Wall Street can experiment with onchain trading without pretending that every rule written for traditional exchanges in the last century maps perfectly onto an automated liquidity pool.

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