SEC Readies Tokenized Stock “Innovation Exemption” That Could Reshape Blockchain Equity Trading

The U.S. Securities and Exchange Commission is preparing to release an “innovation exemption” for tokenized stocks as early as this week, Bloomberg Law reported Monday, a move that could let crypto-native platforms offer digital versions of publicly traded securities under lighter regulatory requirements.

The framework, developed under SEC Chair Paul Atkins’ “Project Crypto” initiative, would create an experimental period during which approved platforms could list tokenized equities without full broker-dealer registration. People familiar with the matter told Bloomberg the proposal is imminent and represents one of the most significant regulatory actions taken under Atkins’ chairmanship.

This story is an excerpt from the Unchained Daily newsletter.

The exemption builds on a foundation the SEC has been laying for months. In January, the agency issued guidance clarifying that tokenizing a security does not change its regulatory classification, meaning federal securities laws apply based on economic substance regardless of the underlying technology. In March, Nasdaq won SEC approval for tokenized equity trading, followed by a similar approval for the New York Stock Exchange in April. Both operate under the Depository Trust Company’s three-year tokenization pilot, where tokenized and traditional shares trade on the same order book.

The innovation exemption takes a different approach from those exchange-level approvals. Where Nasdaq and NYSE kept tokenized trading within the existing market structure, the new framework targets broader onchain trading, potentially allowing platforms like Coinbase to offer compliant tokenized stock trading alongside crypto. Market maker Jump Trading and tokenization firm Securitize announced a partnership earlier this month to trade tokenized stocks, with Jump handling liquidity and Securitize providing infrastructure.

The practical benefits of tokenized stock trading include faster settlement, fractional ownership, reduced transaction costs, and around-the-clock access. Tokenized Treasury products have already passed $15.35 billion in total value locked. Bringing equities onto blockchain rails is the logical next step, and the SEC’s exemption would remove the largest remaining barrier.