The Securities and Exchange Commission (SEC) has postponed the highly anticipated “innovation exemption” for tokenized stocks. This decision follows a thorough review of feedback from traditional stock exchanges and various market participants who have expressed concerns regarding the potential far-reaching implications of such a plan, as reported by Bloomberg.
Under the leadership of Chair Paul Atkins, the SEC was initially poised to announce the innovation exemption within the week.
This framework is intended to establish a new regulatory pathway that would permit digital tokens representing shares of publicly traded companies to be traded on decentralized cryptocurrency platforms around the clock, circumventing the limitations imposed by traditional stock exchanges.
The innovation exemption aligns with Atkins’ broader initiative, “Project Crypto,” which seeks to alleviate existing restrictions on cryptocurrencies, reflecting the pro-crypto stance of the previous Trump administration.
Reports indicate that the SEC was inclined to allow third-party tokens—digital representations of equities such as Apple, Nvidia, or Tesla—to be issued and traded without the consent of the underlying public companies.
This would enable external entities to create blockchain-based wrappers that track a company’s share price and list them on decentralized finance (DeFi) platforms. However, it is important to note that these tokens may not provide traditional shareholder rights, such as voting privileges or dividends. The SEC is reportedly contemplating measures that would require platforms to ensure these rights are granted, or risk being delisted.
Reasons for the SEC’s Delay
The timeline for the exemption’s release has been extended as the SEC considers input from stock exchange officials and other stakeholders who recently engaged with SEC staff.
The World Federation of Exchanges, which includes members such as Nasdaq, Cboe, and CME Group, previously cautioned the SEC in a November 2025 correspondence that such exemptions could “dilute” existing investor protections and “distort” market competition by providing crypto exchanges with a regulatory advantage not available to traditional markets.
The federation warned that legitimizing tokenized stocks prior to implementing comprehensive compliance could result in “negative—potentially acute—consequences” for U.S. markets.
The ongoing debate surrounding tokenization occurs amid divergent visions for the future of U.S. equity markets. Nasdaq, having received SEC approval in March 2026 for its own tokenized securities proposal, is pursuing a model that maintains all trades within the exchange, ensuring that full shareholder rights remain intact and utilizing the DTCC’s enterprise blockchain.
In contrast, the proposed innovation exemption would facilitate the emergence of a parallel, crypto-native market operating alongside the existing system, which may ultimately fragment liquidity among numerous third-party token issuers for the same underlying equity.
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