US SEC Allows Tokenized Stock Trading with Dividend and Voting Rights Guarantee

The U.S. Securities and Exchange Commission (SEC) has opened a regulatory pathway for trading U.S.-listed stocks in token form, according to CNBC citing a recent announcement.

Platforms meeting specific criteria can now handle tokenized stocks under the SEC's 'innovation exemption,' which will apply for five years while the agency gathers data to shape future regulations. The exemption does not replace formal rules but serves as a temporary framework.

The investment industry is debating two key requirements: token holders must have identical rights to traditional shareholders, and companies should retain the ability to object if their securities are tokenized.

This move comes just two days after the Senate failed to pass the Clarifying Law, which had been considered a pivotal bill for defining digital asset classification and regulation. The SEC reportedly shifted to using existing authority to set regulatory boundaries instead of waiting for legislative action.

SEC Chair Paul Atkins stated that the innovation exemption was designed to maintain investor protection and market integrity while addressing barriers preventing responsible innovation in the U.S.

Tokenization involves issuing digital representations of assets like listed stocks or physical assets on blockchain networks. Major exchanges including Coinbase, Robinhood, Gemini, and Kraken under Payward have already launched tokenized stock products in foreign markets but have not yet extended services to U.S. customers.

If widely adopted, tokenization could transform trading and settlement processes, enabling 24/7 trading and integration with blockchain-based financial infrastructure. However, concerns remain about increased volatility during low-volume periods and potential sharp price swings, prompting the exemption to include volume restrictions aimed at mitigating these risks.