On-chain stock trading has begun, but the DeFi frenzy is still a long way off.

Author: Gu Yu, ChainCatcher

On September 17, SEC Chairman Paul Atkins wrote in a statement: "Today, the U.S. Securities and Exchange Commission is taking a significant step into the digital age of the U.S. capital markets." On the same day, the SEC officially issued an "Innovation Exemption" order, opening a five-year compliance pathway for on-chain trading of tokenized U.S. stocks.

According to this exemption order, the U.S. will allow compliant tokenized securities exchanges (TSVs) to conduct on-chain trading of tokenized NMS U.S. stocks in permissioned AMM liquidity pools; platforms and market makers providing liquidity will receive temporary exemptions from being defined as "exchanges" and "dealers" under the Securities Exchange Act of 1934.

The news sent shockwaves through the RWA and tokenization sector. The secondary market reacted swiftly: Securitize surged nearly 15% in a single day, Bullish rose over 6%, and Coinbase and Robinhood also climbed; Uniswap's governance token, UNI, saw its 24-hour gain approach 18%. The market widely views this policy as a historic easing of restrictions on on-chain securities trading by US regulators. Following the Senate's obstruction of the CLARITY Act and the congressional deadlock on crypto legislation, this is a "digital agenda" unilaterally pushed forward by the SEC through executive exemptions, spearheaded by Chairman Atkins, Commissioner Mark Uyeda, and Commissioner Hester Peirce, who heads the Crypto Task Force. For the crypto industry, this is both a long-awaited green light and a clear red line—and where that red line is drawn will determine who will remain at the table of on-chain securities in the coming years. The core of the "innovation exemption" is to provide temporary conditional exemptions for a type of on-chain platform called "Tokenized Securities Venues" (TSVs). Specifically, TSVs can be exempted from being considered "exchanges" under the Securities Exchange Act of 1934 when using innovative permissioned Automated Market Makers (AMMs) and liquidity pools to trade tokenized NMS shares; at the same time, liquidity providers who provide tokenized NMS shares to AMM liquidity pools with their own capital are also exempt from the definition of "dealer." The entire set of exemptions has a time limit: five years from the date of publication. The Commission explicitly positions it as a "controlled experiment"—to observe how emerging venues operate, accumulate data for future legislation, and retain the power to tighten restrictions at any time. In Uyeda's words, the SEC's use of exemptions to promote innovation "is a well-trodden path": money market funds, index funds, ETFs, and other now-common products all grew from the Commission's earlier use of exemptions. Mechanistically, TSVs must meet a complete set of conditions. Trading instruments and volumes are constrained by the number of symbols corresponding to the "price limits" and the upper limit of trading volume; tokenized stocks must provide holders with the same economic and governance rights (including dividends and voting rights) as traditional NMS stocks; the smart contracts used by TSVs must be auditable, publicly available, and deployed on a public, permissionless distributed ledger; once the underlying stock is suspended from trading on the main board, on-chain trading must stop simultaneously; the platform must also disclose operational and trading activity information and regularly disclose the USD-denominated transaction price, size, time, pool address, and end-of-day size to reduce information asymmetry and support regulatory monitoring. The most intriguing aspect is the two "red lines." One is the issuer's veto right: when a TSV wants to list a tokenized stock from a third party it does not control, it must notify the issuer in writing and wait 30 days; if the issuer objects, the token cannot use this exemption. Secondly, synthetic tokens are excluded: "synthetic products" that only track stock prices and do not represent actual shareholder equity are not included in the framework. These two red lines did not arise out of thin air. This summer, AMC Entertainment CEO Adam Aron publicly criticized Robinhood for launching AMC-related stock tokens without the company's involvement, while Robinhood CEO Vlad Tenev argued that publicly traded companies do not control third-party products that reference their stock. A direct consequence of this dispute is the "issuer veto" now enshrined in the exemption order—it returns the initiative for tokenization to the publicly traded company itself. Why now? The background chain is clear. In March, the SEC approved Nasdaq's rules on tokenized stocks; in April, the NYSE passed similar rules; and custodian clearing giant DTCC launched a pilot program for tokenized assets, planning limited production trading in July and a broader launch in October. This week, however, the CLARITY Act, designed to provide a comprehensive legal framework for the crypto market, stalled in the Senate procedural vote due to failing to reach the 60-vote threshold. With legislative channels narrowing, executive exemptions have become Atkins's leverage point to its agenda—previously, in August, the SEC proposed allowing some crypto companies exemptions from securities offering rules, seen as a different move within the same strategy. From a utility perspective, this exemption points to a market structural shift: stocks can be traded 24/7, with near-instant settlement, supporting fragmented holding and user self-custody, weakening the timeframes and clearing barriers upon which traditional brokerages rely for survival. As Atkins stated, this is the first step in bringing the US capital market "into the digital age"; and the total market size of tokenized stocks has expanded from a mere few million dollars at the end of 2024 to over 6.4 billion dollars today (CoinMarketCap data), with almost all of the growth occurring on the retail side. II. Industry Perspectives: Cheers and Caution Coexist After the framework was implemented, the industry reacted swiftly, splitting along the line of interest: "who gets the compliant entry ticket for on-chain securities?" The builders of the new order see it as a legitimization, while the guardians of the existing rules are wary of the channels being circumvented. The cheering faction almost encompasses all proponents of tokenizing "real stocks." Carlos Domingo, CEO of Securitize, a digital asset and RWA tokenization platform, stated that this is "an extremely positive step because it provides a path to trading real tokenized stocks," adding that the framework "reinforces the logic of issuer-led tokenization and will accelerate the adoption of native tokenized securities." Gabo Otte, CEO of Dinari, a custodial tokenization platform, pointed out the regulatory intent: "The SEC is drawing important lines around what tokenized equity should represent—putting stocks on-chain shouldn't mean stripping away the rights that make them stocks." Joris Delanoue, co-founder of Fairmint, believes that "issuer veto power is a key safeguard" for compliant on-chain transfer agency; Ladan Stewart, Global Head of Fintech at White & Case, called the exemption a "major victory" for the crypto industry, believing it allows crypto companies to potentially play both execution and clearing roles without bearing all the rules of registered intermediaries. Grayscale's Zach Pandl predicts the exemption will bring "more utility to tokenized assets," while Superstate founder Robert Leshner predicts issuers will "redesign their products to comply with these rules" in the coming months. The DeFi camp also received unexpected good news. Uniswap founder Hayden Adams retweeted and supported Commissioner Peirce's view that truly decentralized systems driven by autonomous software do not require exemptions, which "corresponds to the regular permissionless Uniswap." The exemption actually applies to permissioned pools on Uniswap v4, providing a compliant path for related assets and users to trade in the United States. Uniswap will submit a comment letter proposing improvements. Peirce himself, through the crypto working group, clearly defined the boundaries: this "is not about DeFi," TSV is just one model for on-chain securities trading, and the committee is open to other models—implying that truly decentralized systems don't need this license. The wary faction mainly comes from traditional Wall Street and rule-abiding prudents. Market maker Citadel Securities and industry organization SIFMA publicly oppose pushing such structural changes through a "special case" approach, advocating for a formal rule revision process; Citadel has also previously warned that tokenization would "siphon" liquidity from the open market. Even within the crypto space, Thomas Cowan, global head of tokenization at Bullish, with his "not fully open" stance, and Peirce with "only one model," both suggest that this door is only partially open and closely watched. Whether it will be officially recognized or revoked five years later depends on the data from this experiment, not on the industry's optimistic expectations. III. Which projects will be most affected? The benefits of the innovation exemption are not evenly distributed. Projects in different sectors will experience significant differences, ranging from direct and indirect benefits to being largely unaffected, or even having their business models impacted. First Tier: Direct Beneficiaries, Obtaining Compliance Access in the US 1. Uniswap v4 and AMM protocols supporting permissioned pools. This is the sector that has reacted most strongly to the market. This exemption explicitly lists permissioned AMM liquidity pools as legal trading vehicles. Uniswap v4's modular architecture natively supports permissioned whitelist pools, allowing institutions to build isolated and controllable liquidity pools that meet all TSV requirements for access, auditing, and data reporting, directly adapting to exemption rules. However, it's crucial to clarify the boundaries: the benefit applies to institutional permissioned pools, not ordinary permissionless DEXs—native public pools remain outside the exemption protection. Other DEXs like Aerodrome and Raydium, if they wish to participate in TSV business, also need to develop permissioned isolation pool modules; their existing products cannot directly benefit from the policy. 2. Tokenized securities service providers such as Securitize and Bullish. Securitize, as a leading digital securities service provider, saw its stock price surge first. These companies possess mature capabilities in securities token issuance, custody, and compliance registration, making them natural candidates to act as TSV operators: connecting with listed companies to complete stock tokenization issuance, building TSV trading venues, connecting with market makers to provide liquidity, and streamlining the entire process of KYC access, data reporting, and communication with issuers. Bullish previously acquired securities transfer service provider Equiniti, completing its traditional securities registration and clearing infrastructure, and thus also possesses the complete conditions for transforming into a TSV provider. 3. Institutional Custody, Audit, and On-Chain Data Service Providers. TSV rules mandate that smart contracts be auditable, transaction data be publicly available, and participants must undergo identity verification. Contract security auditing institutions, compliance custody institutions, and on-chain transaction data analysis platforms will see a new wave of B-end demand. The implementation of TSV business will drive the growth in demand for the entire tokenization compliance infrastructure sector. Second Tier: Indirect Benefits, Access to the US Market but Requires Transformation Cryptocurrency exchanges Coinbase, Robinhood, Kraken, and Gemini have long offered tokenized stocks overseas, but have consistently failed to reach US users; Hyperliquid, a leader in on-chain perpetual contracts, is also communicating with regulators regarding localization. The exemption has given them hope of bringing their products back to the US market, with Coinbase and Robinhood both rising on the same day. However, as mentioned earlier, most of their existing offshore synthetic stock products do not meet the stringent requirement of "real underlying equity." To reap the benefits of the US market, they must first transform their product structure. Underlying public chains Ethereum, Solana, and BNB Chain, with their compliant positioning as "public, permissionless distributed ledgers," can act as settlement networks for TSVs, indirectly benefiting from the spillover of compliant transaction volume. Third Tier: Synthetic Tokens and Traditional Brokerages Under Pressure For every beneficiary, there is one side directly excluded by the "real stocks vs. synthetic tokens" red line. Those feeling the chill first are purely synthetic tokenized products that only offer stock price exposure and do not carry shareholder rights—platforms like Ondo, whose offshore stock products are outside the framework, are practically excluded from the game unless they supplement their rights and compliance, rather than "entering after transformation." This contrasts sharply with the second tier of exchanges: the latter at least possess traffic and the resources for transformation, while the former lack cash distribution and a compliance foundation, making them far more severely impacted. On the other hand, traditional brokerages Charles Schwab and Morgan Stanley's E*Trade, which have long relied on easy profits from clearing and time-of-use spreads, faced pressure from direct competition from crypto-native platforms, with their stock prices falling by approximately 1.4% and 0.5% respectively that day. IV. Summary For the past few years, the crypto industry has been driven by a grand narrative: blockchain tokenization will disrupt traditional capital markets, moving stocks and bonds entirely onto the blockchain, enabling 24/7 global trading and instant clearing and settlement. The implementation of the SEC's innovation exemption has, for the first time, propelled this narrative from fantasy to a real-world pilot phase in the United States. A five-year window, while seemingly short, is not a long one. It was a controlled experiment, not a complete openness; a regulatory breakthrough, and a precise screening. The SEC used a red line between "real stocks" and "synthetic tokens" to keep out products that only had stock price exposure but no shareholder rights, and also returned the issuer's veto power to the listed company itself. For the crypto industry, this is undoubtedly a day worth recording—the first step from the gray area to the compliant desktop for on-chain stocks has been taken. But who can truly weather these five years depends on one thing: whether they can bring "real stocks" onto the blockchain without sacrificing compliance.