SEC to make ‘innovation exemption’ for tokenized stock trading: Report

The U.S. Securities and Exchange Commission is reportedly preparing an innovation exemption to facilitate blockchain-based trading of tokenized public company stocks. This regulatory shift would allow decentralized platforms to offer tokens tracking share prices even without the explicit consent of the underlying issuers. To maintain market integrity, the SEC proposes that these third-party tokens must provide benefits equivalent to common stock, including voting rights and dividends, or face potential delisting. Commissioner Hester Peirce has been a primary advocate for this exemption, which aims to modernize trading and settlement efficiencies beyond traditional exchange systems. While proponents argue this move promotes financial inclusion by providing global access to assets like Nvidia, Google, and Tesla, the proposal faces internal SEC opposition. Furthermore, industry leaders like Securitize president Brett Redfearn have warned that unauthorized tokenization could lead to market fragmentation and valuation uncertainty for investors. This development marks a significant potential expansion of RWA integration into crypto markets, though it remains subject to finalization and broader legislative frameworks like the CLARITY Act.