SEC to Issue Framework for Trading Tokenized Stocks in Innovation Exemption

The U.S. Securities and Exchange Commission is preparing to release a new regulatory framework for trading tokenized stocks, with an announcement expected as early as this week. The initiative, often referred to as an "innovation exemption," aims to establish a clear pathway for digital versions of traditional equities to trade on blockchain-based platforms.

According to sources familiar with the matter, the framework would allow eligible companies and platforms to operate under reduced regulatory requirements for a temporary period, typically cited as three years, provided they adhere to specific volume and participant limitations. During this time, they would be exempt from full SEC registration. At the end of the period, projects must either seek full registration or demonstrate sufficient decentralization to fall under a different regulatory regime. The SEC has consistently stated that tokenizing a security does not change its regulatory status, meaning tokenized stocks remain fully subject to existing federal securities laws.

This move follows several key approvals by the regulator in recent months. In March, the SEC approved a Nasdaq rule change to support the trading and...