The Securities and Exchange Commission has banned price-tracking synthetic tokens from its new framework for onchain stock trading, drawing a hard line that only tokens carrying real shareholder rights qualify.
The order the SEC issued on September 17 grants qualified Tokenized Securities Venues a five-year exemption from registering as exchanges, so they can trade tokenized National Market System stock through permissioned AMM Liquidity Pools. But the relief comes with a condition that changes what a tokenized stock has to be: a venue must verify that the token gives holders the same rights and privileges as the traditional shares of an equivalent class, including dividends and voting.
Tokens that merely track a stock’s price while the token holder owns nothing behind it are explicitly excluded from the exemption. That is the model behind many offshore tokenized-equity products, where users often hold a derivative or a contract-for-difference wrapped in a token rather than the share itself. The same-rights requirement reportedly also excludes derivatives and debt instruments used in several offshore products, such as the tokenized-stock offerings available outside the US through Robinhood.
So a tokenized Apple or Tesla on a US venue has to behave like the share: it pays the dividend the share pays, it votes when the share votes, and trading in it stops the moment the underlying stock is halted on its primary listing exchange.
SEC Chairman Paul S. Atkins said tokenized stocks “must provide holders with the same rights and privileges as the traditional securities, including rights to receive dividends and exercise voting rights.” The order also requires smart contracts to be auditable and public, and venues to publish USD-denominated transaction data, which makes the rights-backed model verifiable rather than a marketing claim.
The exemption runs five years from Federal Register publication, a date not yet set, and the SEC is soliciting public comment on possible modifications.
