SEC to issue tokenized-stock exemption for crypto platforms

The U.S. Securities and Exchange Commission plans to publish an innovation exemption for tokenized stocks as soon as this week, with the agency targeting an issuance on or around May 18, 2026, according to people familiar with the matter. The exemption may let crypto platforms offer onchain trading of U.S. equities without full broker‑dealer registration in certain circumstances.

The exemption is part of an effort the SEC calls Project Crypto. Earlier this year, the SEC approved rules allowing two national exchanges to list tokenized versions of select equities and exchange‑traded funds using a Depository Trust Company tokenization pilot. Those approvals kept tokenized trading within the existing market structure; the expected exemption is designed to permit broader onchain trading by crypto‑native venues and some decentralized finance protocols during a limited experimental period.

Officials plan to include specific guardrails in the exemption, such as exposure limits, disclosure requirements and conditions tied to the program’s temporary nature. In January 2026 the SEC issued guidance stating that tokenizing a security does not change its legal classification and that federal securities laws apply based on the economic substance of the instrument. The exemption would not eliminate those legal obligations but could ease certain registration requirements for participating platforms while the pilot runs.

Supporters point to faster settlement, fractional ownership, lower transaction costs and the potential for round‑the‑clock trading as practical benefits of tokenized stock trading. Crypto exchanges and some decentralized platforms could expand offerings if they meet the exemption’s eligibility and compliance conditions.

Banks and securities exchanges raised objections during the comment process, arguing the experimental framework could weaken custody safeguards, anti‑money‑laundering controls and investor protections, and could cause market fragmentation and unfair competition. Industry participants submitted comments addressing how onchain trading would interact with existing market structure and compliance regimes.

The SEC has not yet posted the exemption text on its website. When released, the document is expected to specify eligible participants, the scope of covered tokens, operational conditions, reporting duties and the duration of the experimental period. The action aligns with broader federal work on market modernization, including coordination with the Commodity Futures Trading Commission, token taxonomy efforts and steps toward onchain settlement.