The U.S. Stock Market Moves Onchain
The U.S. Stock Market Moves Onchain
Dear Readers,
Fifth Era has been investing in the next generation of financial markets since 2014. Between them, Alison and Matthew bring nearly four decades of experience to this work, stretching back to Alison’s time as CFO of Barclays Global Investors, when the firm launched iShares.
Our thesis has remained remarkably consistent: the world’s assets, monies, and commodities will become digital and will increasingly be traded, settled, and custodied using blockchain technology.
We have invested consistently behind that thesis, raising five blockchain-focused early-stage venture funds and making concentrated direct investments in companies including Securitize, Kraken, Tether, Bitwise, Yellow Card, and Uphold.
We believe this transition is an essential building block of the autonomous digital economy: a world in which value will autonomously move as freely and efficiently as information moves today.
This month, that future moved an important step closer.
Why Tokenization Matters
Tokenization allows a traditional asset, like a share, bond, fund, or commodity, to be represented and transferred on a blockchain.
The asset retains its real-world value and legal character, but gains some of the useful attributes of blockchain: programmable ownership, transparent recordkeeping, fractional access, near-instant settlement, and, potentially, around-the-clock markets.
Equities represent a particularly large opportunity. Public stock markets contain tens of trillions of dollars of value, yet much of their underlying infrastructure still depends on fragmented databases, layers of intermediaries, and settlement processes designed decades ago.
Moving equities onchain could make markets faster, cheaper and more accessible. But until now, there has been no clear route for blockchain-native trading of genuine U.S. public shares at meaningful scale.
What the SEC Changed
The policy direction has been building. The SEC created its Crypto Task Force in January 2025, launched Project Crypto later that year and, in January 2026, published a staff framework describing different models for tokenized securities.
On September 17, the SEC issued what it calls an “Innovation Exemption”, a temporary, conditional safe harbour for the secondary trading of tokenized U.S. exchange-listed stocks.
In simple terms, the exemption allows a new type of Tokenized Securities Venue to use permissioned automated market makers and liquidity pools without registering as a national securities exchange. It also gives certain firms providing liquidity limited relief from dealer registration.
This is a meaningful change. Automated market makers are a foundational innovation of decentralised finance. Instead of matching each buyer with a seller through a traditional order book, software and pools of capital continuously make markets onchain.
The relief is thoughtfully bounded:
The tokens must represent genuine U.S. listed shares, not merely synthetic price exposure.
Holders must receive the same core rights as conventional shareholders, including dividends, voting rights, and claims on residual assets.
Trading is permissioned, even though the smart contracts must run on public, permissionless
blockchains.An unaffiliated third party must notify the underlying company, which then has 30 days to object.
The programme begins with strict trading limits: up to 75 large-cap and certain exchange-traded product symbols at no more than 0.25% of each stock’s average daily volume, and up to 250 other eligible symbols at no more than 2.5%.
The exemption applies to secondary trading, not to initial public offerings or other primary issuance.
The exemption runs for five years, from September 17, 2026, until September 17, 2031. The SEC may change its duration or any other aspect if it concludes that doing so is in the public interest or necessary to protect investors.
This announcement is best understood as a five-year regulatory runway: long enough for serious companies to build, for institutions to participate, and for the SEC to learn from a live market before writing more durable rules.
Why This Matters for the Market
The most important change may be confidence.
Large financial institutions rarely commit meaningful capital to markets that could be declared impermissible after they have built the technology, recruited teams, and integrated compliance systems. The SEC has now provided a defined route, with rules covering shareholder rights, issuer consent, identity checks, recordkeeping, trading limits, and regulatory oversight.
That does not eliminate legal or operational risk. It does, however, make the risk more understandable. Banks, brokers, asset managers and public companies can now move from research projects to commercial planning with far greater confidence.
The exemption also draws a crucial line between two very different products. Some existing offshore stock tokens provide economic exposure to a share but no ownership, voting rights, or claim against the underlying company. The SEC framework is designed for genuine tokenized securities whose holders retain the rights of shareholders.
That distinction should favour regulated infrastructure over lightly structured wrappers.
What It Means for the Companies Building the Market
Securitize may be one of the clearest beneficiaries. The company already combines tokenization technology with regulated broker-dealer, alternative trading system, and transfer-agent capabilities. Furthermore, it has deep institutional backing, having received investment from Morgan Stanley and BlackRock.
In July, it brought its own NYSE-listed shares onchain at listing, using an issuer-sponsored structure designed to represent the same common stock, not a synthetic instrument or separate share class.
The SEC exemption opens a clearer path to add blockchain-native secondary liquidity to that stack. Securitize is positioned to help public companies tokenize ownership, maintain compliant shareholder records and connect those assets to new trading venues. In our view, this strengthens its potential role as core infrastructure for onchain capital markets.
Other platforms bring different pieces of the puzzle:
Kraken’s xStocks have demonstrated international demand for transferable, around-the-clock stock exposure. The current product is unavailable in the U.S. and does not confer full shareholder rights, so it would not fit the exemption as presently structured. But Kraken’s distribution, custody and liquidity capabilities could become highly relevant to a compliant U.S. product.
Uphold has long connected crypto users with multiple asset classes through a single digital platform. As tokenized securities mature, businesses with established wallets, settlement infrastructure, and customer distribution can provide an important bridge, directly or through regulated partners.
Robinhood has already launched stock-token products and its own blockchain outside the U.S. Its current tokens provide economic exposure rather than legal ownership of the underlying shares.
The new framework creates a route for a different, rights-bearing U.S. product, if Robinhood chooses to build or partner for one.
Stablecoins and tokenized money-market funds should also benefit. They can serve as the cash leg of an onchain securities market, allowing an investor to move between stocks and dollars without leaving blockchain rails. Over time, issuance, trading, settlement, custody, and collateral management can begin to converge into one programmable system.
The View from London: SEC Opens Door to Next-Generational Financial Infrastructure
We view the SEC’s decision as a key moment, not because every regulatory question has been answered, but because the central question has changed.
For years, policymakers debated whether blockchain belonged in regulated finance at all. The SEC is now considering how blockchain-native trading should be integrated into the U.S. national market system.
That is a profound shift.
The first era of blockchain developed largely outside the traditional financial system. It was decentralised, global, and frequently unregulated. Its next era will not simply replace existing institutions. It will combine the efficiency and programmability of decentralised technology with the rights, controls, and protections required by the world’s largest financial markets.
The safe harbour remains temporary, conditional, and reversible. The initial trading limits are deliberately conservative. There will be technical challenges, political debate, and inevitable failures along the way.
But the direction of travel is becoming clearer. Public blockchains, smart contracts and tokenized ownership are moving from the edge of finance towards its core.
That is the transition Fifth Era has been investing behind since 2014 and that led us to back the firms at the forefront of this market, including Securitize, Kraken and Tether. We believe the tokenization of equities will become a multi-trillion-dollar market and an important part of the infrastructure of the digital autonomous economy.
The U.S. stock market is not moving onchain overnight. But this month, the SEC opened the door.
Thank you for reading.
Best,
Mitchell Mechigian
Partner, London
ABOUT FIFTH ERA
'Focused on Innovation'
Our firm believes we are entering a period of unprecedented innovation, which we call the Fifth Era, and every industry and business will be dramatically impacted. We focus on investing in these new innovations, especially private companies focused on the convergence of Internet, AI/Agentic and Blockchain technologies to shape an Autonomous Digital Economy. Our investment strategies construct portfolios of hard-to-access early stage funds and make concentrated direct investments into emerging category leaders during their mid and late stage investment phases. Fifth Era's investment strategies are now in their 13th year and to date we have invested in a combined portfolio of 1,500+ companies including 80+ unicorns. In the US we are a SEC registered investment advisor, in the UK a FCA appointed representative and our funds are registered in Switzerland.
Visit us at www.FifthEra.com to learn more.
Note: SEC Registration does not imply a certain level of skill or training.