US SEC Chairman: Tokenized Stock On-Chain Trading Must Meet Four Key Conditions; Synthetic Tokenized Stock Trading Strictly Prohibited

SEC Chairman Paul S. Atkins issued a statement today announcing that an "innovation exemption" will provide a temporary, conditional regulatory exemption for on-chain trading of certain tokenized NMS stocks. However, Chairman Atkins indicated that the exemption requires meeting four key conditions: First, qualifying tokenized securities venues (TSVs) must be U.S. entities and comply with the economic and trade sanctions rules of the U.S. Office of Foreign Assets Control (OFAC); Second, a permissioned access model must be implemented, allowing only qualified participants to trade tokenized NMS stocks; Third, trading of synthetic tokenized stocks is prohibited; 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 dividend and voting rights; Fourth, issuers retain the right to object to and block the trading of their securities on TSVs, and the anti-fraud and anti-manipulation provisions under federal securities law remain fully applicable to related securities activities.