The Securities and Exchange Commission has pumped the brakes on its highly anticipated “innovation exemption” for tokenized stocks, pushing back the release of the framework as it weighs input from traditional stock exchanges and other market participants wary of the plan’s sweeping implications, according to Bloomberg reporting.
The SEC, under Chair Paul Atkins, was preparing to release the so-called innovation exemption as soon as this week.
The framework would create a new regulatory pathway allowing digital tokens linked to publicly traded company shares to trade on decentralized crypto platforms — 24 hours a day, seven days a week — bypassing the constraints of traditional stock exchanges.
The exemption is part of Atkins’ broader “Project Crypto” initiative, which aims to relax existing crypto restrictions in line with the Trump administration’s pro-crypto agenda.
The SEC was reportedly leaning toward permitting third-party tokens — digital representations of stocks like Apple, Nvidia, or Tesla — to be issued and traded without the consent of the underlying public companies.
This means outside actors, not the issuers themselves, could create blockchain-based wrappers tracking a company’s share price and list them on decentralized finance (DeFi) platforms.
These tokens may not carry traditional shareholder rights like voting or dividends, though the SEC is reportedly considering requiring platforms to provide those rights or risk delisting.
Why the SEC is delaying
The timing of the exemption’s release has been pushed back as the agency weighs feedback from stock-exchange officials and other market participants who met with SEC staff in recent days.
The World Federation of Exchanges — whose members include Nasdaq, Cboe, and CME Group — previously warned the SEC in a November 2025 letter that such exemptions could “dilute” existing investor protections and “distort” competition by giving crypto exchanges a regulatory shortcut unavailable to traditional markets.
The group cautioned that granting legitimacy to tokenized stocks before full compliance implementation would “undoubtedly have negative — potentially acute — consequences” for U.S. markets.
The tokenization debate is unfolding against a backdrop of competing visions for the future of U.S. equity markets. Nasdaq, which received SEC approval in March 2026 for its own tokenized securities proposal, is pursuing a different model: one that keeps all trades on-exchange with full shareholder rights intact, built on the DTCC’s enterprise blockchain.
The innovation exemption, by contrast, would sanction a parallel, crypto-native market running alongside the existing system — potentially fragmenting liquidity across dozens of third-party token issuers for the same underlying stock.
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