Tokenised Stocks: SEC Prepares For Blockchain Trading In Potential Shake-Up Of U.S., Global Markets
The U.S. Securities and Exchange Commission is preparing to introduce an “innovation exemption” framework that could allow the trading of tokenized versions of publicly listed stocks on blockchain-based platforms, according to a Bloomberg News report, in what could mark one of the biggest regulatory shifts yet linking traditional finance with crypto markets.
The proposed exemption, which could be unveiled as early as this week, would create a regulatory pathway for digital tokens tied to publicly traded equities to trade on crypto infrastructure under lighter or modified compliance requirements during an experimental phase, Bloomberg reported, citing people familiar with the matter.
The move is expected to form part of a broader push by the administration and SEC Chair Paul Atkins to expand blockchain-based financial infrastructure and encourage tokenization of traditional assets.
Tokenized stocks are blockchain-based digital representations of equities that can potentially allow faster settlement, fractional ownership and around-the-clock trading. Supporters argue the technology could modernize capital markets by reducing trading friction and widening retail investor access.
The SEC has been exploring regulatory accommodations tied to tokenization for months. In July last year, Atkins said the agency was considering an “innovation exception” aimed at encouraging blockchain-based financial experimentation within existing securities laws.
The regulator also issued guidance earlier this year clarifying that tokenized securities remain subject to federal securities laws regardless of whether ownership records are maintained on-chain or off-chain.
According to reports, the exemption could allow certain crypto-native trading venues to offer tokenized equities without requiring full traditional exchange or broker-dealer registration in some cases, though investor protection safeguards and disclosure requirements are expected to remain.
The development comes as Wall Street firms, crypto exchanges and fintech companies intensify efforts to bring stocks, bonds and other financial instruments onto blockchain networks.
Industry advocates say tokenization could eventually reshape securities trading by enabling near-instant settlement and programmable financial products. Critics, including some traditional exchanges and banking groups, have warned that fragmented regulation and differing custody standards could create new market risks.
The SEC is yet to publicly comment on the Bloomberg report.