Inside the SEC’s Blueprint for Tokenized Markets: the Innovation Exemption speech👇

In a speech titled, Number Go Down and Other Schadenfreude, the SEC Chair lays out the forthcoming Innovation Exemption framework. Key points:

1️⃣ Innovation Exemption” = live sandbox for tokenized securities

Allows limited trading of tokenized securities without full broker-dealer registration:

- volume caps

- participant whitelisting

- temporary relief from incompatible rules

Digital asset firms accepted into the sandbox can avoid registration as brokers, exchanges or other regulated entities for a limited period of time.

2️⃣ Integration with TradFi is the goal (not disruption)

Tokenization will plug into existing markets, not compete with them.

Planned rulemaking focus:

- broker-dealer custody (incl. stablecoins)

- transfer agents for blockchain records

3️⃣ Market infrastructure is the real focus of the proposed rule making

The proposed direction centers on rebuilding core market plumbing to support tokenized securities.

Key areas of build-out:

- custody frameworks

- transfer agent modernization

- trading venues (incl. AMMs)

- capital raising pathways

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