SEC readies tokenized-stock rule; exchanges must disclose rights

The Securities and Exchange Commission is preparing an ‘innovation exemption’ that would let crypto-native exchanges and some decentralized finance platforms offer tokenized stocks during a limited pilot. The proposal would require platforms to disclose whether a token conveys legal shareholder claims and related rights or only tracks a stock’s price. It would ease certain registration requirements for the pilot while preserving federal securities obligations and adding disclosure and exposure limits.

The plan is part of Project Crypto and follows approvals in 2026 that allowed Nasdaq and the New York Stock Exchange to trade tokenized versions of select equities and ETFs through the Depository Trust Company’s tokenization pilot. The exemption would extend permission to offer on-chain trading of tokenized equities to crypto-first venues and some decentralized protocols during the experimental period.

Tokenized stocks typically take two forms. Full security tokens represent a legal claim on an underlying share held by a regulated custodian and can carry voting rights and dividends when structured properly. Synthetic tokens mirror a stock’s price through contracts or swaps and do not confer legal ownership, voting rights, or direct entitlement to dividends.

Market activity has grown outside U.S. retail channels. Kraken’s xStocks lists 100 fully backed, 1:1 tokenized U.S. stocks and ETFs and reported more than $25 billion in transaction volume since its June 2025 launch; those products remain unavailable to U.S. customers. Coinbase applied in 2025 for permission to offer tokenized equities to U.S. users. Robinhood launched stock tokens in the European Union and is developing a layer-2 blockchain for real-world asset tokenization. Dinari received a broker-dealer license in June 2025 to offer blockchain-based shares to U.S. investors.

Incumbent market infrastructure is being adapted for tokenization. The Depository Trust & Clearing Corporation plans limited production trading of tokenized assets in July and a broader launch in October. That system will allow tokenized versions of stocks and ETFs backed by assets the DTCC already holds.

Some industry figures and market participants have raised concerns about multiple token versions and market fragmentation. Brett Redfearn, president of Securitize and a former SEC trading and markets director, warned that ‘if third parties can tokenize Apple or Amazon without the issuer at the table, there’s no theoretical limit on how many wrappers of the same company can exist at once.’ Citadel Securities has urged structured rulemaking instead of broad exemptions, saying looser rules could weaken anti-money-laundering and know-your-customer protections.

SEC Chair Paul Atkins, who launched Project Crypto in April 2025, has argued that domestic regulatory pathways are needed to keep tokenization activity in the United States and told ETHDenver attendees that ‘market participants should be able to engage with decentralized applications on public, permissionless blockchains if they desire.’ Commissioner Hester Peirce, an internal proponent of the exemption, described the proposal as a way to integrate tokenized securities into existing financial systems without sweeping immediate change.

Regulators and firms cite potential operational benefits such as faster settlement, around-the-clock trading, fractional ownership, and the ability to combine tokenized securities with decentralized lending and collateral systems. Data provider DeFiLlama estimates the on-chain real-world-asset market at about $30 billion, roughly 0.02% of global equity capitalization based on SIFMA’s $126.7 trillion figure for 2024.

Under the proposal, platforms that list tokens would have to state clearly whether holders receive legal equity claims and related rights. The draft would permit price-tracking instruments that do not deliver shareholder benefits but could remove listing permission for platforms that fail to disclose the token’s legal status.