SEC moves toward enabling tokenized equities trading

SEC moves toward enabling tokenized equities trading

The Securities and Exchange Commission is expected to roll out an “innovation exemption” for tokenized stocks as soon as this week, establishing a new framework for gaining exposure to publicly listed companies.

In a notable shift, the SEC is reportedly open to allowing trading of tokenized equities that are not issued or endorsed by the underlying companies themselves.

➡️ Why this matters

The US equity market remains the deepest and most globally recognised capital market. This move has the potential to materially expand access by bringing US stocks onto more programmable, globally accessible rails.

There are three models emerging:

- Issuer-led and CSD-led models, which aim to upgrade core market infrastructure by improving settlement cycles and expanding asset utility within regulated systems

- Third-party issuer models, which focus on distribution and accessibility by wrapping equities into tokenized formats outside traditional channels

This SEC direction is a clear unlock for the third-party model. A sector of the market that has seen over $1B inflows and $30B trading volume in the past year.

Leaders such as Ondo Finance have already demonstrated early traction, approaching $1B in AUM and $10B in trading volume. A formal regulatory framework would significantly reduce perceived risk for global investors and accelerate adoption.

SEC's move will rewire the US equities market. Who will be the critical players when it comes issuance, settlement, custody, trading and distribution of a bigger, more global and more liquid US market? Stay tuned.

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