SEC innovation exemption enables tokenized stock trading venues

Three companies have expressed intent to operate trading venues for tokenized U.S. equities under a five-year regulatory exemption issued by the U.S. Securities and Exchange Commission (SEC). The participating entities include TSV LLC, a joint venture between OKX and Intercontinental Exchange (ICE) known as OKXICE, and Kephas Corporation, a subsidiary of Perpetuals.com.

These venues utilize an “innovation exemption” that allows qualifying platforms to operate without formal registration as an exchange until September 2031. Instead of traditional order matching, these platforms use automated market makers (AMM) and liquidity pools to facilitate trades between authorized users.

However, the expansion faces resistance from major corporations. Under SEC rules, companies must be notified before their shares are tokenized by third parties, and they have a 30-day window to object. As of late October, 22 companies have filed objections to prevent their stock from being traded on these venues. Recent objectors include Wells Fargo, Arm Holdings, and Intuit, joining previous objectors such as Microsoft, Alphabet, and Goldman Sachs.