The New York Stock Exchange and crypto brokerage Blockchain.com are exploring a system that could give investors access to tokenised versions of US-listed shares and exchange-traded funds, following a major regulatory move by the Securities and Exchange Commission.
NYSE Group and Blockchain.com have signed a memorandum of understanding outlining a potential distribution arrangement through the exchange operator’s planned digital trading platform.
Under the proposal, Blockchain.com customers could eventually gain access to tokenised US exchange-listed stocks and ETFs through NYSE’s planned digital alternative trading system, subject to regulatory approvals.
The companies are also planning greater integration of their market data. NYSE parent Intercontinental Exchange could distribute Blockchain.com crypto-market data and analytics to its customers, while Blockchain.com would incorporate NYSE and ICE market data into its own platform.
The trading service is not yet operational.
No launch date has been announced, and the companies have not identified which countries would initially have access to the tokenised products.
The project arrives days after the SEC created a new regulatory pathway for blockchain-based stock trading, as regulators in major markets continue developing their FCA Targets London Crypto Trading | Lawyer Monthly .
On September 17, the regulator approved a temporary five-year “Innovation Exemption” allowing certain Tokenized Securities Venues to facilitate trading in tokenised National Market System stocks without being treated as conventional securities exchanges under parts of the Securities Exchange Act.
The exemption is conditional rather than a broad deregulation of tokenised securities.
Participating venues are subject to limits on both the number of securities and trading volumes permitted under the framework.
They must also verify that a tokenised stock provides its holder with the same rights and privileges as the equivalent traditional security. Those rights include dividends and voting rights where they attach to the underlying shares.
The SEC has also imposed protections where an unaffiliated third party creates a tokenised version of another company’s stock.
Before making that security available for trading, a venue must notify the underlying issuer and give it an opportunity to object.
UKJT AI Liability Statement — Lawyer Monthly used by participating platforms must be publicly auditable and deployed on a public, permissionless distributed ledger. Trading in a tokenised stock must also stop whenever trading in the underlying security is halted on its primary exchange.
Those conditions address one of the principal legal issues surrounding tokenised shares: not every blockchain token that tracks the value of a listed company necessarily gives its owner the same legal position as a conventional shareholder.
Some existing tokenised products outside the US provide economic exposure to a stock without making the buyer a direct shareholder in the underlying company.
The SEC’s framework seeks to distinguish those synthetic arrangements from tokenised NMS stocks carrying equivalent shareholder rights.
For financial-services lawyers, that distinction is significant.
Tokenisation changes the technological method through which a security may be recorded, transferred or traded, but it does not remove the underlying product from Legora Wolters Kluwer SEC Rules US Statutes AI — Lawyer Monthly
Questions surrounding investor ownership, shareholder rights, custody, settlement, market surveillance and regulatory responsibility therefore remain central to the development of tokenised equity markets.
NYSE has already been preparing its own infrastructure for this shift.
In April, the exchange filed a rule change with the SEC enabling securities to trade on the NYSE in tokenised form during a Depository Trust Company pilot programme. Related NYSE exchanges have made similar filings.
The Blockchain.com collaboration represents a further step by connecting that developing market infrastructure with a crypto-focused customer base.
Blockchain.com already offers tokenised stocks to some customers in Europe, although the company has not disclosed how many investors currently use the products.
The new US regulatory framework could substantially broaden the potential market, but the NYSE collaboration remains subject to regulatory approvals and the eventual launch of the exchange operator’s digital trading venue.
For lawyers and financial institutions, the project demonstrates how quickly the legal debate around tokenised securities is moving from regulatory theory towards market infrastructure.
The SEC has provided a five-year experimental framework rather than a permanent rulebook. The success of projects such as the NYSE and Blockchain.com collaboration could therefore influence how US securities regulators ultimately approach blockchain-based equity trading once the temporary exemption expires.