SEC Prepares Framework for Tokenized Stocks on Blockchain

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• SEC is reportedly preparing an “innovation exemption” for tokenized stock trading platforms.
• The proposal could allow digital securities trading under a lighter regulatory structure.
• DTCC plans limited tokenized asset trades in July before a broader October launch.
• Nasdaq and ICE are expanding blockchain-based securities initiatives.
• SEC Chair Paul Atkins said current securities rules do not fit blockchain-based systems.

SEC Reportedly Preparing Tokenized Securities Framework

The U.S. Securities and Exchange Commission (SEC) could soon introduce a new framework for trading tokenized stocks, according to a Monday report by Bloomberg Law. The report stated that the agency is preparing an “innovation exemption” that could allow trading platforms to offer digital versions of publicly traded securities under a lighter regulatory structure.

According to people familiar with the matter cited in the report, the proposal could arrive as early as this week. The move would represent one of the clearest indications that U.S. regulators are increasingly engaging with tokenized securities, an area where cryptocurrency firms and traditional financial institutions are becoming more closely connected.

Referring to the reported SEC framework, Geraci wrote, “Under the SEC’s proposal, platforms that fail to provide those benefits would lose the right to list the tokens.”

ETF analyst Nate Geraci also commented on the proposal, pointing to a section discussing how trading platforms may need to meet certain standards to continue listing tokenized securities.

Wall Street Firms Expand Tokenized Asset Initiatives

Tokenized stocks are blockchain-based versions of equities designed to trade continuously and settle faster than traditional shares. Supporters of the structure say tokenized securities could reduce settlement delays and improve global market access, while critics have raised concerns regarding liquidity fragmentation and investor protections.

The Depository Trust & Clearing Corporation (DTCC), which processes and safeguards a large portion 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. The system is expected to support tokenized versions of stocks and exchange-traded funds backed by assets already held within DTCC infrastructure.

Nasdaq is also developing a framework that would allow companies to issue blockchain-based shares while preserving traditional ownership rights. The SEC approved Nasdaq’s tokenized securities plan in March. Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, has also announced plans to expand into tokenized stocks and crypto-linked products through a partnership and investment connected to crypto exchange OKX.

SEC Chair Signals Support for Blockchain-Based Market Infrastructure

SEC Chair Paul Atkins recently said the agency is considering formal rulemaking for onchain trading systems, blockchain settlement infrastructure, and crypto custody models as financial markets become increasingly automated and AI-driven.

Atkins stated that existing securities rules do not align with blockchain-based systems that combine exchange, clearing, and settlement functions into a single protocol. He also said the SEC should clarify regulatory requirements through rulemaking rather than enforcement actions. The SEC and CFTC’s proposed crypto classification framework could reduce regulatory uncertainty and support broader institutional adoption of digital assets.

FAQs

1. What is the SEC’s proposed tokenized stocks framework?
The reported SEC proposal would create an “innovation exemption” allowing platforms to trade tokenized versions of publicly traded securities under a lighter regulatory structure.

2. What are tokenized stocks?
Tokenized stocks are blockchain-based versions of traditional equities designed to enable faster settlement and continuous trading through blockchain infrastructure.

3. Which companies are expanding into tokenized securities?
DTCC, Nasdaq, and Intercontinental Exchange (ICE) have announced initiatives related to tokenized stocks and blockchain-based securities infrastructure.

4. What did Nate Geraci say about the SEC proposal?
Nate Geraci highlighted a section of the reported proposal stating that platforms failing to provide the required benefits could lose the right to list tokenized assets.