TLDR
- SEC could unveil its tokenized securities innovation exemption as soon as August 14.
- The framework could allow eligible tokenized stocks to trade around the clock on blockchain networks.
- Public companies could gain the right to object to third parties tokenizing their shares without approval.
- SEC is considering AML requirements and U.S.-entity rules for tokenized securities platforms.
- The SEC will meet August 14 to consider rules for certain investment contracts involving crypto assets.
The U.S. Securities and Exchange Commission could unveil an innovation exemption for tokenized securities as soon as Friday, August 14, creating a potential route for blockchain-based versions of stocks to trade around the clock. The agency is also preparing to consider a separate framework for certain crypto-related investment contracts.
The tokenization framework could allow traditional securities to trade through blockchain infrastructure while exempting eligible platforms from some existing requirements. The SEC is considering safeguards that would give public companies a way to object when third parties seek to tokenize their shares without approval.
SEC Weighs Rules for Tokenized Stock Trading
The innovation exemption would create a regulatory framework for firms testing blockchain-based versions of traditional securities. Tokenized stocks represent shares or economic exposure through digital tokens, allowing transactions to use blockchain networks rather than relying only on existing market infrastructure.
Round-the-clock trading could become possible for eligible tokenized securities under the framework. Traditional U.S. stock exchanges operate during set trading sessions, although investors can already access extended-hours trading through some brokers and alternative trading venues.
The SEC initially planned to release the exemption in May but delayed the proposal while reviewing additional feedback. Discussions included concerns from listed companies and exchanges about third parties creating tokenized versions of publicly traded shares without direct involvement from the underlying companies.
“We have strongly argued that corporate issuers should remain involved in how their shares are tokenized,” Securitize CEO Brett Redfearn said. The SEC is now considering giving companies the ability to object to unauthorized third-party tokenization.
SEC Considers AML Safeguards for Tokenized Securities
The SEC is also considering measures intended to address tokenized stocks issued or traded through overseas platforms. Potential requirements could restrict participating trading platforms to U.S.-based entities and apply additional anti-money-laundering controls.
Those conditions would form part of the regulatory structure governing how tokenized securities reach U.S. investors. Details remain subject to change because the SEC has not released the final innovation exemption or confirmed all conditions that would apply.
The proposal comes as financial and crypto companies expand work involving tokenized assets. Market operators are developing blockchain infrastructure designed to support digital representations of traditional financial products, while regulators assess how existing securities laws apply to those systems.
The innovation exemption would allow eligible firms to test new systems under defined SEC conditions rather than removing securities oversight. Any final framework would establish which companies and trading platforms qualify and what investor protection requirements they must follow.
SEC Sets August 14 Meeting on Crypto Rules
Separately, the SEC has scheduled an open meeting for August 14 to consider proposing a tailored offering framework for certain investment contracts involving crypto assets. The proposal would begin a formal rulemaking process and would be released for public comment if commissioners approve it.
The SEC’s latest regulatory work comes as Congress continues negotiations over the Digital Asset Market CLARITY Act. The legislation seeks to establish a broader federal framework governing digital asset markets and clarify regulatory authority over different crypto activities.
Senate lawmakers did not advance the legislation before leaving Washington for the August recess. Senate Majority Leader John Thune has since taken procedural steps toward a possible vote in mid-September.
