The Securities and Exchange Commission is finalizing plans to introduce an 'innovation exemption' framework that would allow blockchain-based tokenized stock trading in the United States, according to sources familiar with the matter. The move, expected to be formally proposed in the coming weeks, represents the agency's most concrete step yet toward integrating digital assets into the traditional securities market — without requiring the tokens to register as full-fledged securities.
What the exemption would do
The framework would carve out a special regulatory lane for tokenized equities — digital representations of company stock traded on blockchain networks. Under current rules, any token that looks like a stock is treated as a security and must comply with the same registration and reporting requirements as a traditional share. The innovation exemption is designed to waive certain of those requirements for platforms that meet specific conditions: auditable on-chain records, investor protections, and a cap on per-investor exposure. The goal is to let companies issue and trade tokenized shares without triggering the full Securities Act registration process.
Why the SEC moved now
The timing is no accident. Several foreign jurisdictions — including the UK, Singapore, and the EU's DLT pilot regime — already allow some form of tokenized securities trading. U.S. firms have been pressing the SEC for clarity for years, warning that a slow regulatory response would push innovation offshore. The exemption, if finalized, would give American exchanges and issuers a clear path forward, while keeping the agency's enforcement authority intact. The SEC has not yet released a draft rule; the internal work is still in the drafting stage, sources said.
The commission is expected to publish a formal proposal by mid-June. That will trigger a public comment period — likely 60 to 90 days — before the exemption can take effect. Industry groups are already gearing up to weigh in on investor safeguards and the scope of the exemption. The biggest unresolved question: whether the exemption will cover secondary trading platforms or only primary issuances. Without that detail, exchanges can't yet build compliant products.
