SEC gives tokenized stock trading platforms five-year regulatory relief

The US Securities and Exchange Commission on Thursday unveiled a five-year exemption for platforms that facilitate trading in blockchain-based stocks and other securities, a move that could bring digital assets closer to mainstream equity markets.

The exemption allows platforms offering tokenized stocks, digital tokens representing shares that can trade on a blockchain, to avoid several rules that apply to traditional stock exchanges such as Nasdaq and the New York Stock Exchange.

Liquidity providers in tokenized stocks will also receive a five-year exemption from dealer registration requirements, Reuters reported.


The move comes as crypto companies push to expand into stock trading, potentially bringing their platforms into greater competition with traditional brokerages.

SEC sets guardrails for tokenized stocks

Platforms will have to notify companies before listing tokenized versions of their shares. They will also be prohibited from offering the token if the stock's issuer objects, according to an SEC official.

The exemption does not cover "synthetic" tokens that provide exposure to a stock through a derivative or another product.

The SEC said the relief was needed because platforms seeking to offer tokenized stocks could face significant difficulties complying with federal securities laws without making potentially burdensome changes to their business models.

"The Innovation Exemption is designed to resolve challenges that have prevented responsible innovation from taking root in the United States while providing investor protections and market integrity standards," SEC Chair Paul Atkins said in a statement.

Tokenization could allow shares to trade around the clock and settle instantly, while also potentially lowering transaction costs. The SEC said the structure could support investor self-custody and fractional ownership of shares, giving blockchain-based platforms a broader role in equity markets.

Crypto firms prepare to enter stock trading

Several major crypto companies have already signalled plans to launch tokenized stocks in the US once regulatory conditions allow. Coinbase is among those that have indicated an interest, while Robinhood, Kraken and other crypto exchanges already offer tokenized stocks outside the US.

The SEC's decision also comes against the backdrop of a stalled push for broader cryptocurrency legislation. The US Senate failed earlier this week to advance comprehensive crypto legislation backed by President Donald Trump, dealing a setback to digital asset companies and Republicans who had supported the bill.

Over time, the new exemption could alter how stocks are traded and bring crypto-native platforms into more direct competition with established brokerages, including Morgan Stanley's E*Trade and Charles Schwab, analysts and attorneys said.

The exemption is part of a wider shift in the SEC's approach to cryptocurrency under Trump. The agency in August proposed exemptions for certain crypto companies and offerings from US securities rules, which could make it easier for some firms to issue tokens and raise capital.

The latest move therefore goes beyond simply allowing a new form of stock trading. It gives blockchain-based platforms a defined regulatory window to develop tokenized securities while keeping issuer consent and other investor protections in place.

(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times)