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The U.S. Securities and Exchange Commission is finalizing a structure that would permit digital, blockchain-based equivalents of publicly traded stocks to be transacted on cryptocurrency exchanges — a development indicating the significant evolution in Washington’s stance toward an industry it once viewed with skepticism.
A Bloomberg report from Monday indicates that the SEC intends to introduce an “innovation exemption” for tokenized securities in the coming week. This proposal, currently being developed by an agency headed by Chair Paul Atkins, would establish a less stringent regulatory path for platforms that facilitate digital representations of equities, bypassing the need for complete registration compliance. The SEC has not provided any response to requests for comment.
The distinctive aspect of this framework lies in the nature of the tokens themselves. Under the reported arrangement, external parties would be able to issue tokens mirroring the price of a public company’s shares, even without the company’s endorsement or authorization.
These tokens would be tradable around the clock on decentralized crypto platforms. They would not confer traditional shareholder privileges, such as voting rights at annual meetings, dividend disbursements, or participation in corporate decision-making processes that impact shareholders.
Tokenized stocks offer accelerated settlement, operate seamlessly across international borders without the encumbrances of traditional infrastructure, and have the potential to broaden access to equity markets for investors previously excluded due to geographical limitations or prohibitive costs. The aspiration is substantial: advocates aim to integrate the operational framework of the $126 trillion global equity market onto blockchain technology.
The absence of consent from the originating companies and the elimination of shareholder protections prompt significant concerns regarding the actual value investors are acquiring and who bears accountability when issues arise.
Wall Street, SEC’s embrace of tokenized products
The SEC’s apparent shift coincides with Wall Street’s transition from cautious observation of tokenization to actively pursuing it. The Depository Trust & Clearing Corporation, a central entity in U.S. securities settlement, has announced plans for limited production trading of tokenized assets starting in July, with a wider rollout scheduled for October. The DTCC’s involvement is crucial, as it handles and secures the majority of U.S. market transactions, and its entry into tokenization lends institutional legitimacy to what has largely been an experimental domain.
Nasdaq and the New York Stock Exchange are also actively engaged. In March, the SEC greenlit Nasdaq’s proposed rule change to enable tokenized share trading, preserving conventional ownership rights.
The NYSE, whose parent company Intercontinental Exchange has also forged a partnership with crypto exchange OKX, received its own SEC approval in April and is developing a platform for continuous onchain settlement.
The market for tokenized equities is already expanding at a rate that surpasses most projections. Data from RWA.xyz reveals that the sector currently holds $1.4 billion in distributed value across over 2,200 assets, an increase of approximately 30% in the last 30 days alone. Monthly transfer volume has reached $3.24 billion, and the number of holders has grown by 25% in a month, reaching approximately 265,000 individuals.
Atkins has characterized the SEC’s direction as a move towards regulatory clarity. He has asserted that existing securities regulations were devised for an era of human intermediaries and fixed trading hours, rather than for blockchain protocols that consolidate exchange, clearing, and settlement functions into a single tier. The agency, he believes, should establish rules rather than rely on enforcement actions to guide the development of these markets.
This perspective holds considerable influence in the current political landscape. The Republican-controlled Senate Banking Committee advanced crypto legislation earlier this month, as part of a broader initiative under the current Trump administration to establish a more defined regulatory framework for crypto products and digital assets.
Details can be found on the website : bitcoinmagazine.com