The SEC is developing an innovation exemption to allow regulated platforms to trade tokenized U.S. stocks around the clock. Chair Atkins backs the plan, with key questions on investor protection, custody, and market surveillance still unresolved.
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The SEC has begun developing a regulatory route that could let qualified platforms trade tokenized U.S. stocks around the clock, seven days a week.
The agency is working on what it calls an “innovation exemption,” granting selected firms temporary relief to test tokenized securities under defined conditions while permanent rules are written, according to SEC filings and public statements by commissioners.
Chair Paul Atkins has backed using exemptive authority to bring more financial activity onto blockchain networks without removing tokenized stocks from federal securities oversight. Under the proposal, approved platforms could offer digital versions of U.S.-listed shares and process transactions outside the operating hours of traditional exchanges.
Commissioner Hester Peirce said in March that SEC staff was developing an exemption to facilitate “limited trading of certain tokenized securities.” Peirce described the possible measure as narrower than the blanket exemption discussed by the SEC’s Investor Advisory Committee.
No final framework, eligibility criteria, or implementation date has been announced. Investors therefore cannot assume that tokenized versions of every U.S. stock will soon become available for continuous trading.
Regular U.S. stock market hours run from 9:30 a.m. to 4 p.m. Eastern time on business days. Registered venues and brokers already provide extended sessions. A blockchain-based venue can process transfers continuously, allowing eligible securities to change hands during nights, weekends, and public holidays.
The exemption could give regulated platforms a defined route to test round-the-clock markets for tokenized shares. Such relief would still require the commission to decide which firms qualify, what activities they may conduct, and which existing rules remain mandatory.
For American investors, continuous trading could provide access outside the normal market day. The SEC would still need to determine how brokers handle best execution, disclosures, and order routing when the underlying stock market is closed and price discovery is spread across blockchain and conventional venues.
Investor protections also depend on the type of token offered. An issuer-backed token can represent the same security recorded through a new ownership system. A product created by an unrelated third party may only track the price of a stock or provide a contractual claim against the platform.
In July, two transfer-agent groups asked the SEC to separate issuer-backed shares from unaffiliated tokens. The groups warned that some third-party structures may not give buyers direct ownership, voting rights, or the same legal claim to dividends as registered shareholders.
The SEC’s Investor Advisory Committee raised similar concerns in a March recommendation. Committee members opposed a blanket exemption and called for clear ownership disclosures, regulatory oversight of intermediaries, and protections designed to give investors fair execution terms.
Putting a stock on a blockchain does not change its status under U.S. law. Atkins said in a November 2025 speech that economic reality, rather than the token label, determines how federal securities rules apply to an asset.
A token representing a share of a public company would therefore remain a security. Depending on the structure, platforms involved in issuing, trading, custody, or settlement could face requirements covering broker-dealer registration, exchange or alternative trading system rules, transfer-agent records, and clearing.
Custody presents another issue because a blockchain token and the underlying share must remain properly linked. If a third party holds conventional stock and issues a separate token against it, regulators must determine how buyers can verify the backing and recover assets if the issuer or custodian fails.
Market surveillance will require its own controls. The SEC must decide how participating venues detect manipulation, share trading information, and manage transactions that occur when the main U.S. exchanges are closed. Regulators may also need to address whether blockchain settlement can operate alongside the Depository Trust Company’s existing custody and post-trade systems.
The proposed exemption has not changed current requirements. On Aug. 14, the SEC canceled an open meeting that was scheduled to consider a tailored offering regime for certain investment contracts involving crypto assets, citing an unforeseen scheduling issue.
The canceled meeting did not amount to a vote on blanket approval for 24/7 tokenized stock trading. The SEC’s public notice said the meeting concerned registration and offering rules for certain crypto-related investment contracts. The tokenized-securities exemption remains a separate policy project under development.
Parts of the U.S. market have already received limited permission to test tokenized securities. In December 2025, SEC staff issued a no-action letter allowing the Depository Trust Company to operate a defined tokenization service for three years under specified conditions.
The eligible asset universe includes Russell 1000 stocks, major index exchange-traded funds, and U.S. Treasury securities. A no-action letter indicates that SEC staff would not recommend enforcement based on the facts presented. It does not create a permanent industry rule or authorize every company to offer similar services.
DTCC has assembled more than 100 members and partners for its tokenization work, according to an August project update. Participating firms include traditional financial institutions and blockchain companies testing tokenized equities, Treasuries, collateral, securities lending, and margin processes.
Earlier production tests examined whether regulated assets could move between blockchain networks while remaining connected to established custody and ownership records. DTC, DTCC’s depository subsidiary, provides custody and asset servicing for more than $114 trillion in securities. That figure represents its total business, not the value scheduled for tokenization.
Nasdaq has also moved into regulated blockchain-based trading. The SEC approved its pilot in March 2026, allowing selected participants to trade certain tokenized equities alongside conventional shares.
Under Nasdaq’s structure, tokenized and traditional versions carry the same rights and pricing. The pilot covers eligible Russell 1000 securities and major index-linked ETFs. The products stay inside the existing national market system rather than creating unrelated stock-tracking tokens.
NYSE has filed rule changes for tokenized securities. SEC records show that the exchange submitted amendments in April to enable securities to trade in tokenized form, adding another regulated-market model for the commission to assess.
At the same time, the SEC is considering amendments to Regulation NMS, the collection of rules that controls how U.S. equity orders move between trading venues. Proposed changes include rescinding Rule 611 and Rule 610(e), which govern order protection and access fees in the national market system.
Ondo Finance supported the proposed rescission in an Aug. 11 letter to SEC Secretary Vanessa Countryman. The company argued that the existing rules favor continuous order books and can restrict alternative execution systems that use different trading models.
Rule 611 generally requires trading centers to prevent executions at prices inferior to protected quotations displayed elsewhere. Ondo told the commission that removing the provision could give auction-based, blockchain-based, and other execution systems more room to operate alongside conventional order books.
The company also asked the SEC to correct parts of its economic analysis before adopting the amendments. Ondo’s submission was filed under Release No. 34-105655 and File No. S7-2026-20 as part of the commission’s public comment process.
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