The U.S. Securities and Exchange Commission (SEC) is reportedly moving closer to allowing crypto firms to offer blockchain-based stocks.
The crypto industry is optimistic about the potential of tokenized stocks to transform the stock markets. The new model could enable 24/7 trading and instant settlement, thereby increasing liquidity and reducing transaction costs, Reuters reported on Wednesday.
SEC Chair Paul Atkins is expected to introduce an “innovation exemption” in the coming weeks that would allow companies to venture into new digital asset business models without strictly adhering to all of the SEC’s disclosure and investor-protection rules, according to the report.
The exemption could allow companies to offer tokenized versions of U.S. stocks, potentially reshaping equity markets over time. If adopted more broadly, it could enable crypto firms to compete directly with traditional brokerages such as Morgan Stanley (NYSE:MS), E*Trade, and Charles Schwab Corporation (NYSE:SCHW).
Some regulators and Wall Street firms warn that allowing tokenized stock trading could create new risks for investors and the financial system, depending on how the rules are structured. The market for tokenized stocks is currently valued at more than $6.34 billion, according to data provider CoinMarketCap.
SEC did not immediately respond to Benzinga‘s request for comments.
Tokenized Stock Push Accelerates
Atkins first signaled the proposed "innovation exemption" in April, and reports in May indicated the agency could unveil the framework for tokenized stocks in the same month.
However, several crypto firms are already moving into tokenized stocks, increasing anticipation for the SEC’s upcoming guidelines.
On Tuesday, Coinbase (NASDAQ:COIN) announced plans to launch fully backed 1:1 tokenized U.S. stocks, allowing holders to trade, redeem, and receive dividends while each token is backed by an actual share. The move differs from many existing offerings that provide stock exposure through derivatives, and comes as rivals like Robinhood (NASDAQ:HOOD) and Kraken expand their own tokenized equity initiatives.
Earlier this month, Binance announced bStocks, a new initiative that will let users tokenize stocks they own, creating blockchain-based synthetic versions of equities on the BNB Chain.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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