SEC Might Open Door For Tokenized Stocks On DEFI

SEC Prepares Innovation Exemption for Tokenized Stocks

The U.S. Securities and Exchange Commission is moving toward a significant regulatory shift that could bring tokenized stocks onto decentralized finance platforms. According to Bloomberg, the SEC is expected to release an innovation exemption for tokenized stocks as soon as this week, according to people familiar with the matter.

The framework would allow digital tokens linked to public-company shares to trade on decentralized platforms, including tokens issued by third parties without the consent of the companies involved. That marks a notable departure from existing market structure, where tokenized trading has largely remained within regulated exchange environments.

The exemption may let crypto platforms offer onchain trading of U.S. equities without full broker-dealer registration in certain circumstances. Officials plan to include specific guardrails in the exemption, such as exposure limits, disclosure requirements, and conditions tied to the program's temporary nature.

Platforms that deny token holders voting rights or dividends could lose eligibility under the proposal. Regulators are said to be considering restrictions on platforms that omit rights such as dividends or voting access.

Wall Street Already Moving, But Questions Remain

The exemption is part of a broader effort under SEC Chair Paul Atkins. The exemption is part of an effort the SEC calls Project Crypto. Earlier this year, the SEC approved rules allowing two national exchanges to list tokenized versions of select equities and ETFs using a Depository Trust Company tokenization pilot. The expected exemption is designed to permit broader onchain trading by crypto-native venues and some DeFi protocols during a limited experimental period.

Major institutions are already positioning for the shift. The Depository Trust and Clearing Corporation (DTCC) said it plans to begin limited production trades of tokenized assets in July ahead of a broader launch in October, with the system allowing tokenized versions of stocks and ETFs backed by assets already held within DTCC's infrastructure. Nasdaq is also developing a framework for companies to issue blockchain-based shares while preserving traditional ownership rights, and the SEC approved the exchange operator's tokenized securities plan in March.

The practical benefits of tokenized stock trading include faster settlement times, fractional ownership, reduced transaction costs, and the ability to trade around the clock. Those features have drawn interest from DeFi platforms and from investors seeking broader access to U.S. equity markets. However, critics warn that it may weaken transparency, price discovery, and investor protections, while concerns have also grown around DeFi platforms, which continue to face cybersecurity vulnerabilities and fragmented liquidity.

Sources:
CoinDesk: SEC to Propose Tokenized Stock Framework, Bloomberg Reports
Crypto Briefing: SEC to Release Innovation Exemption for Third-Party Tokenized Shares
Bitcoin.com News: Tokenized US Stocks Get New Regulatory Framework as SEC Prepares Exemption