The U.S. Securities and Exchange Commission is preparing to greenlight the trading of tokenized stocks, according to people familiar with the matter. The decision would effectively let blockchain-based versions of equities trade on registered exchanges and alternative trading systems, blurring the line between traditional finance and crypto. It's a step the industry has lobbied for years — but critics warn the push is outpacing protections for retail investors.
What the change would actually do
Under the expected rule, broker-dealers and exchanges that already hold a license could list and trade digital tokens representing shares in companies like Apple, Tesla, or any publicly traded firm. Settlement would happen on a blockchain, potentially cutting clearing times from two days to near-instant. The SEC has not published a final framework yet, but the direction is clear: treat tokenized stocks as securities subject to the same disclosure, custody, and anti-fraud rules that apply to traditional equities, while allowing the underlying technology to handle the back end.
The investor protection debate
Not everyone is on board. Consumer advocacy groups have flagged risks around custody — if a token is lost or stolen, who's liable? The SEC's own investor advisory committee raised questions about whether current rules adequately cover blockchain glitches, fork events, or smart-contract bugs that could wipe out holdings. Several state securities regulators have also pressed the agency to hold off until there's a clear recovery mechanism for hacked tokens. The SEC's final language is expected to address some of those concerns through enhanced insurance requirements and mandatory audits of token contracts.
What happens next
The SEC could issue a formal proposal within weeks, followed by a public comment period. Trading platforms including Nasdaq and several crypto-native exchanges have already signaled they'd apply for token-trading licenses. The timeline for final approval is unclear — agency chair Mark Uyeda has pushed for faster action, but internal debates over custody rules have slowed things down. One thing is certain: this won't be the last word. Once the SEC moves, state regulators and Congress will have their say.
