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The SEC is expected to release an innovation exemption for tokenized stocks as soon as this week.

SEC Chair Paul Atkins and Commissioner Hester Peirce had already sketched the plan in February, describing a temporary, limited framework with volume caps, white-listed buyers and sellers, automated market makers, and temporary relief while the SEC develops longer-term rules.

Atkins confirmed in April that the agency was “on the cusp” of releasing a cabined framework for compliant on-chain trading of tokenized securities.

Bloomberg Law reported the move on May 18, which represents the clearest crypto-adjacent securities policy signal in years, with implications that run well beyond token prices.

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What the exemption actually is

SEC staff defined tokenized securities in January 2026 as traditional securities represented as crypto assets, with crypto networks maintaining ownership records, in whole or in part.

The legal status of the asset follows it regardless of its form, so federal securities laws apply whether a share resides on a blockchain or in a DTC account.

The innovation exemption would allow qualifying firms to test tokenized securities trading on novel venues, including AMMs and, potentially, public permissionless blockchains, within defined parameters.

Atkins explicitly discussed embedding compliance checks directly into smart contract code, including resale restrictions and issuer-holder communications.

A tokenized security can include its own eligibility rules, transfer restrictions, and compliance logic, delivered automatically at the point of transfer.

US equities already moved from T+2 to T+1 settlement in 2024, and the SEC framed that move as making market plumbing more resilient by reducing time, credit exposure, and liquidity risk.

Tokenization extends this logic further with longer trading windows, near-instant settlement, fractional access, and programmable post-trade processing.

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Nasdaq received SEC approval in March 2026 to allow certain DTC-eligible securities to trade in tokenized form on the same order book as traditional shares, with T+1 settlement preserved.

NYSE-parent ICE is separately developing a tokenized securities platform targeting 24/7 operations, instant settlement, dollar-sized orders, and stablecoin-based funding, pending regulatory approval.

Incumbent exchanges are building their own versions of the next pipe before crypto platforms can claim the market.

Coinbase sought SEC approval in 2025 to offer tokenized equities, a move that would reportedly put it in direct competition with retail brokerages.

Kraken’s xStocks platform already offers 100 fully backed tokenized US stocks and ETFs outside the US market, and Robinhood has launched EU stock tokens while building a layer-2 blockchain for real-world asset tokenization.

The SEC exemption would determine whether those crypto-native models can compete for US investors under a regulated framework.

The window

DefiLlama data puts the on-chain RWA market at close to $30 billion, which represents just 0.02% of global equity value, against SIFMA’s 2024 global equity market capitalization of $126.7 trillion.

The stock-token segment is still early, and the exemption could determine if tokenized stocks expand into a regulated extension of US equities or stay a crypto side market.

SEC staff distinguishes issuer-sponsored tokenized securities, in which the token represents a direct claim on the underlying share, from third-party products, including custodial receipts, linked securities, and synthetic derivatives.

Robinhood’s EU stock tokens explicitly carry that distinction in their disclosures: they are derivatives that expose investors to counterparty and insolvency risks tied to Robinhood’s financial position.

A tokenized stock can look identical in an app and carry entirely different legal rights depending on its structure.

Crypto rails enter the securities stack, or incumbents control the upgrade?

If pilots succeed and the exemption expands, issuer-sponsored tokenized shares and custodial tokenized securities will have clearer regulatory pathways, and crypto-native platforms will compete for tokenized equity flows alongside Nasdaq’s DTC-compatible model and ICE’s parallel digital venue.