The U.S. Securities and Exchange Commission is on the verge of releasing a landmark “innovation exemption” that would allow publicly traded company stocks to be represented as crypto tokens and traded on blockchain-based platforms — a move that could fundamentally reshape how equities are bought and sold around the world.
What is a tokenized stock?
A tokenized security is a financial instrument — such as a stock — that is formatted as or represented by a crypto asset, where the record of ownership is maintained in whole or in part on or through one or more crypto networks. In plain terms, instead of holding shares in a brokerage account that settles over one to two business days, an investor would hold a crypto token representing that same stock on a blockchain. The SEC formally defined this asset class in January 2026, making clear that these instruments remain fully subject to federal securities law no matter what technology underlies them.
What exactly is the SEC proposing?
The SEC is expected to release an “innovation exemption” for tokenized stocks as soon as this week. Under the proposed exemption, tokens representing public company shares could be traded on decentralized platforms without consent from the issuers or granting traditional shareholder rights. This is a deliberately experimental, time-limited framework — not a permanent reclassification of these assets outside securities law.
SEC Chair Paul Atkins and Commissioner Hester Peirce sketched the plan in February, describing a temporary, limited framework with volume caps, white-listed buyers and sellers, automated market makers, and temporary relief while the SEC develops longer-term rules. Atkins confirmed in April that the agency was “on the cusp” of releasing a framework for compliant on-chain trading of tokenized securities.
SEC Chair Paul Atkins
Why does this matter?
Tokenized stocks are blockchain-based versions of equities that can trade around the clock and settle faster than traditional shares. Supporters argue the structure could reduce settlement delays and make markets more accessible globally. For everyday investors, that could mean being able to buy or sell a stock at 2 a.m. on a Sunday — something entirely impossible in today’s market structure.
The move could be one of the biggest shifts into crypto infrastructure yet, paving the way for 24/7 trading of digital securities, potential DeFi integration for equities, and growth in platforms handling tokenized assets. The total global equity market is valued at around $126 trillion, meaning even a small migration to tokenized rails would represent enormous economic activity.
Why does this matter?
How did we get here?
The SEC accelerated its broader crypto policy agenda under its “Project Crypto” initiative launched in August 2025. In September 2025, the SEC and the Commodity Futures Trading Commission jointly launched a public roundtable focused on improving crypto regulatory clarity, covering decentralized finance, perpetual futures contracts, and the growth of 24/7 crypto trading markets. The innovation exemption for tokenized stocks has been under discussion as part of Project Crypto since mid-2025, with industry participants submitting formal comments throughout that process.
Wall Street is already moving
The SEC’s proposal does not exist in a vacuum. Major financial institutions are racing to position themselves for the shift. The Depository Trust & Clearing Corporation (DTCC), which processes and safeguards much of the U.S. securities market, said it plans to begin limited production trades of tokenized assets in July ahead of a broader launch in October. Nasdaq is also developing a framework for companies to issue blockchain-based shares while preserving traditional ownership rights — a plan the SEC approved in March. Meanwhile, Intercontinental Exchange, the parent company of the New York Stock Exchange, unveiled plans to expand into tokenized stocks through a partnership with crypto exchange OKX.
On the crypto side, Coinbase sought SEC approval in 2025 to offer tokenized equities, and Kraken’s xStocks platform already offers 100 fully backed tokenized U.S. stocks and ETFs outside the United States.
Who is pushing back?
Not everyone is on board. The World Federation of Exchanges, whose members include Nasdaq, Cboe, and CME Group, warned the SEC in a November 2025 letter that these exemptions could “dilute” existing investor protections and “distort” competition by giving crypto exchanges a regulatory shortcut unavailable to traditional markets. Critics have also raised concerns about liquidity fragmentation — the risk that trading activity gets spread too thin across too many platforms, making it harder to get a fair price.
The bigger picture
“We’ve entered a global race to tokenize money and capital markets,” noted Token Terminal. “The economic advantages of asset tokenization are too good to ignore, which is why we believe that all other major nations and economic zones will try to follow the U.S. playbook when it comes to stablecoins and asset tokenization.”
SEC Chair Paul Atkins has signaled support for that direction, saying the agency is considering formal rulemaking for on-chain trading systems, blockchain settlement infrastructure, and crypto custody models as financial markets become increasingly automated and AI-driven.
If implemented, the SEC’s innovation exemption would mark one of the most consequential regulatory decisions in the history of U.S. financial markets — blending the $126 trillion global stock market with the infrastructure of crypto for the first time.
