SEC Proposal Lets Crypto Trade on Stock Exchanges

The Securities and Exchange Commission proposed letting crypto assets trade alongside stocks on registered exchanges, a move that would reshape how digital tokens are bought and sold in the U.S.

The proposal, published Wednesday, would allow alternative trading systems and national securities exchanges to list crypto securities under the same regulatory framework that governs equities. The SEC said the change is designed to bring investor protections to crypto markets without requiring a separate legislative mandate.

"This is the most significant structural change to crypto market structure since the SEC started applying securities laws to digital assets," said John Reed Stark, a former SEC enforcement attorney. "It effectively tells exchanges: if you want to trade crypto, register and follow the rules."

The proposal covers custody, settlement, and market surveillance requirements. Exchanges that list crypto securities would need to maintain segregation of customer assets, submit to SEC inspections, and implement systems to detect manipulation across both crypto and equity trading.

Coinbase, the largest U.S. crypto exchange by volume, rose 6.2% on the news. The company has long argued that existing securities laws can accommodate digital assets without new legislation. Robinhood Markets, which offers crypto trading alongside equities, gained 3.8%.

Critics said the proposal could stifle innovation by forcing crypto projects into a regulatory framework designed for stocks. "The SEC is trying to fit a square peg in a round hole," said Kristin Smith, CEO of the Blockchain Association, a trade group. "Crypto assets have different settlement mechanics, different custody models, and different risk profiles than equities."

The proposal is open for public comment for 60 days. SEC Chair Gary Gensler said the agency expects to finalize the rule by the end of the year.

For traders, the practical effect depends on how many crypto tokens the SEC classifies as securities. Bitcoin and ether have been treated as commodities by the agency, meaning they would likely remain outside the exchange framework. Most other major tokens face uncertain status.

"The market is pricing in a scenario where the SEC approves a handful of tokens for exchange trading, not the entire universe," said Alex Thorn, head of research at Galaxy Digital. "That would concentrate liquidity in the approved tokens and push everything else into offshore venues."

The proposal follows a string of SEC enforcement actions against crypto exchanges, including lawsuits against Coinbase and Binance. The agency has argued that many tokens traded on those platforms are unregistered securities.

AlphaScala's proprietary Alpha Score for Coinbase is 72/100, reflecting strong institutional positioning but regulatory overhang. The stock page is COIN.