The US Securities and Exchange Commission is reportedly developing an "innovation exemption" for blockchain-based tokenized trading of public companies, according to a Bloomberg report published Monday. The exemption could come as early as this week, potentially expanding the trading of publicly listed firms beyond traditional stock exchanges to decentralized crypto platforms. The SEC reportedly consulted with "hundreds of market participants" to gather feedback on how to structure rules for tokenized trading. SEC Commissioner Hester Peirce led the push for tokenized stock trading to receive an innovation exemption, sources told Bloomberg. The move reflects growing Wall Street interest in blockchain-based tokenization, which is seen as offering potentially greater efficiencies for trading and settlement compared to traditional systems.
## SEC Innovation Exemption Details
The SEC has proposed that third-party tokens tracking public company shares carry the same benefits as common stock—including voting rights and dividends—or face delisting, Bloomberg reported. Details of the exemption have not been finalized and could change before implementation, according to sources familiar with the matter. Cointelegraph reached out to the SEC for comment but did not receive an immediate response. Despite the expected exemption, some SEC officials do not support the decision to allow tokenized stock trading, sources said.
## Industry Developments
Blockchain-based tokenization has gained momentum among major financial institutions. The New York Stock Exchange's parent company, Intercontinental Exchange, announced in January that it would launch a tokenization platform for 24/7 trading and settlement of stocks and exchange-traded funds using a blockchain post-trade system. Bullish, the crypto exchange led by former NYSE president Tom Farley, strengthened its tokenization capabilities earlier this month with its $4.2 billion acquisition of transfer agent platform Equiniti.
## Opposition and Concerns
Brett Redfearn, president of Securitize—one of the largest crypto-native tokenization platforms—expressed concerns over the SEC's expected exemption. Redfearn argued that enabling third parties to tokenize stock "without an issuer at the table" could lead to fragmentation issues and leave investors uncertain about the value of their shares. Tokenized trading has also expanded into the pre-IPO space, enabling investors to gain exposure to private companies before they go public. However, some companies, including OpenAI and Anthropic, have opposed unauthorized tokenized stocks tracking their valuations.
## Legislative Context
The SEC's tokenization move follows the Senate Banking Committee's advancement of the CLARITY Act on Thursday, setting it up for a full Senate floor vote next month. Backers of tokenized stock trading have said the technology can promote financial inclusion by enabling individuals without access to US markets or traditional brokerage accounts to gain exposure to public companies including Nvidia, Google, and Tesla.
