SEC exemption for tokenized stocks enables 24/7 trading on blockchain. Offshore market already $6.4B. Coinbase leads onshore push.
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The SEC is preparing an innovation exemption that would let crypto platforms trade tokenized versions of US public stocks on blockchain rails, with 24/7 trading hours and faster settlement.
The guidelines, expected shortly after June 17, 2026, would allow approved platforms to list digital representations of equities without going through the full broker-dealer registration process. The framework, championed by SEC Chair Paul Atkins, requires that these tokenized shares carry the same rights and protections as their conventional counterparts.
Commissioner Hester Peirce has emphasized the boundaries. The exemption is designed for "limited and temporary experimentation," not a wholesale replacement of existing market infrastructure.
Stock markets currently operate roughly 6.5 hours per weekday. Tokenized versions could trade continuously, including weekends and holidays. Traditional trades settle under T+1; blockchain-based settlement could compress that timeline, cutting counterparty risk and freeing capital locked during the settlement window.
Coinbase has publicly signaled its intent to launch tokenized stock products in the US as soon as the regulatory framework solidifies. Traditional exchanges have pushed back, people familiar with the matter said, contributing to delays in the guidelines' release.
The competitive pressure already has a price tag. Offshore tokenized stock products, operating outside US jurisdiction, have accumulated a market capitalization exceeding $6.4 billion, according to industry data. That demand currently flows to platforms beyond the SEC's reach. The agency appears motivated to bring some of that activity onshore under a regulated umbrella.
The innovation exemption borrows from sandbox frameworks used by regulators in Singapore and the UK, which let companies test new financial products under supervision before full-scale rollout.
Allowing equity trading on platforms that haven't gone through traditional broker-dealer vetting raises questions about investor protection and market manipulation. The "equal rights and protections" requirement embedded in the exemption is the SEC's attempt to address those concerns.
"The exemption is designed for limited and temporary experimentation," Peirce said.
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