The Securities and Exchange Commission has pumped the brakes on its long-awaited “innovation exemption” for tokenized stocks, pushing back the release of the framework as it weighs input from traditional exchanges and other market participants wary of the plan’s sweeping implications, according to Bloomberg reporting.
The SEC, under Chairman Paul Atkins, was preparing to release the so-called innovation exemption as early as this week.
The framework would create a new regulatory pathway that allows digital tokens tied to listed company shares to trade on decentralized crypto platforms — 24 hours a day, seven days a week — bypassing the restrictions of traditional exchanges.
The exemption is part of Atkins’ broader “Project Crypto” initiative, which aims to relax existing crypto restrictions in line with the Trump administration’s pro-crypto agenda.
The SEC reportedly leaned toward allowing third-party tokens — digital representations of stocks like Apple, Nvidia or Tesla — to be issued and traded without the consent of the underlying public companies.
This means that external actors, not the issuers themselves, could create blockchain-based wrappers that track a company’s share price and list them on decentralized finance (DeFi) platforms.
These tokens may not carry traditional shareholder rights like voting or dividends, though the SEC is reportedly considering requiring platforms to provide those rights or risk delisting.
Why the SEC is Delaying
The timing of the release of the exemption has been pushed back as the agency weighs feedback from exchange officials and other market participants who met with SEC staff in recent days.
The World Federation of Exchanges — whose members include Nasdaq, Cboe and CME Group — previously warned the SEC in a November 2025 letter that such exemptions could “water down” existing investor protections and “distort” competition by giving crypto exchanges a regulatory shortcut unavailable to traditional markets.
The group warned that granting legitimacy to tokenized shares prior to full compliance implementation would “undoubtedly have negative – potentially acute – consequences” for US markets.
The tokenization debate unfolds against a backdrop of competing visions for the future of US stock markets. Nasdaq, which received SEC approval in March 2026 for its own tokenized securities proposal, is pursuing a different model: one that keeps all trades on the exchange with full shareholder rights intact, built on DTCC’s enterprise blockchain.
The Innovation Exemption, by contrast, would sanction a parallel, crypto-native market that runs alongside the existing system — potentially fragmenting liquidity across dozens of third-party token issuers for the same underlying stock.