Wall Street Regulator To Issue Tokenized Stock Framework

The U.S. Securities and Exchange Commission (SEC), Wall Street’s regulator, is planning to introduce a new framework for trading tokenized stocks.

Analysts say the framework is likely to accelerate Wall Street’s push to place traditional stocks and other securities such as exchange-traded funds (ETFs) on blockchain rails.

The SEC is reportedly preparing an “innovation exemption” that would allow trading platforms to offer digital versions of publicly traded stocks under a light regulatory structure. 

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The proposal is expected as early as this week, according to several media reports. 

The framework is one of the clearest signals yet that U.S. regulators are supportive of tokenized stocks, an area where cryptocurrency firms and financial institutions intersect.

Tokenized stocks are blockchain-based versions of equities that can trade around the clock and settle much faster than traditional shares. 

Supporters argue the structure will reduce settlement delays and make markets more efficient. Critics warn about liquidity issues and investor risks from around the clock trading. 

Exchanges such as the Nasdaq (NASDAQ: $NDAQ) and investment banks such as Morgan Stanley (NYSE: $MS) are pushing into tokenized stock trading. 

Nasdaq is developing a framework for companies to issue blockchain-based shares while preserving traditional ownership rights for shareholders. 

The Depository Trust & Clearing Corporation, which safeguards much of the U.S. stock market, said it plans to begin limited trades of tokenized assets in July ahead of a big launch in October. 

The system would allow tokenized versions of stocks and ETFs backed by assets already held within the Depository Trust’s infrastructure.

Advocates say that tokenized securities are the next evolution of the stock market.