Three months ago, bringing U.S. equities onto blockchain-based markets still looked more like a vision for the future than an immediate question of market structure. On Sept. 17, that changed. The Securities and Exchange Commission created a temporary framework for limited trading of tokenized U.S. stocks on qualified onchain venues — moving tokenization another significant step from the financial frontier toward the regulated mainstream. I have had a close view of that transition as co-chair of a joint venture between Intercontinental Exchange, the parent company of the New York Stock Exchange, and OKX that is building infrastructure for tokenized and digitally native financial products.

The SEC issued what it calls an “Innovation Exemption,” creating a temporary, conditional framework under which qualified venues, using automated market makers and liquidity pools, can trade certain tokenized stocks listed on American exchanges without registering with the SEC. The exemption lasts five years and permits experimentation with blockchain-based trading while imposing restrictions intended to protect investors.

That is a significant development. But its greater significance may be what it tells us about the pace of technological change.

The debate is no longer whether blockchain technology might someday reach traditional capital markets. The question is how existing markets will incorporate it and what rules will govern that transition.

Andrew Cuomo is the former Governor of New York, and a board member of OKX.

Tokenization does not eliminate financial risk, nor does it make the basic responsibilities of regulators obsolete. Quite the opposite. Markets ultimately function on trust, and new technology succeeds only when investors have confidence that ownership is real, transactions are reliable, markets are fair and bad actors will be held accountable.

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