The U.S. Securities and Exchange Commission is finalizing an “innovation exemption” framework that would allow blockchain-based versions of publicly traded stocks to trade on crypto platforms, according to a Bloomberg report published on May 18. The proposal, developed under SEC Chair Paul Atkins as part of the agency’s broader “Project Crypto” initiative, could be released as early as this week and would mark one of the most significant regulatory shifts in the intersection of traditional finance and digital assets.

What the Innovation Exemption Would Allow

Under the reported framework, third-party platforms would be able to issue tokens that track the price of a public company’s shares without that company’s consent or direct involvement. These tokenized representations would trade around the clock on decentralized crypto platforms, offering settlement speeds and cross-border accessibility that legacy equity infrastructure cannot match. The exemption would create a lighter regulatory pathway, allowing platforms to offer these digital equities without requiring full broker-dealer registration or exchange licensing in certain cases.

However, the tokens as described would not carry traditional shareholder rights. Holders would not receive voting privileges, dividend payments, or any seat at governance proceedings of the underlying company. This distinction raises questions about what investors are purchasing and what protections apply when disputes arise, a point that consumer advocates and some legal scholars have already flagged.

Wall Street Infrastructure Is Already Moving

The SEC’s reported move arrives as major financial institutions have accelerated their own tokenization efforts. The Depository Trust and Clearing Corporation has announced plans to begin production trades using tokenized infrastructure in July, with a broader launch expected in October. Nasdaq received SEC approval for a rule change related to digital asset securities in March, and the New York Stock Exchange followed with its own approval in April. The NYSE’s parent company, Intercontinental Exchange, has also entered a partnership with crypto exchange OKX to explore tokenized products.

Data from RWA.xyz indicates that the tokenized equities sector has reached approximately $1.4 billion in value across more than 2,200 assets, with monthly transfer volumes of $3.24 billion and a holder base of roughly 265,000 that has been growing at approximately 25 percent per month. Proponents see the potential to bring the plumbing of the $126 trillion global equity market onto blockchain rails, though the gap between current adoption and that vision remains substantial.

Regulatory Context and Political Momentum

Chair Atkins first signaled the agency’s interest in an innovation exemption framework in mid-2025, and the concept has evolved through multiple rounds of internal development. The Republican-led Senate Banking Committee has advanced several pieces of crypto-related legislation during the current administration, creating a broader political environment that has been more receptive to digital asset integration than at any point in the agency’s history. The SEC did not respond to requests for comment on the Bloomberg report.

The framework would sit alongside existing regulatory structures rather than replace them, offering an alternative pathway for platforms that meet certain criteria. Industry observers note that the approach mirrors how financial regulators in other jurisdictions have created sandbox or exemption mechanisms to accommodate emerging technologies without fully rewriting existing securities law.

Risks and Uncertainties

Despite the momentum, significant questions remain about how the exemption would function in practice. The absence of company consent for token issuance could create legal conflicts, particularly if tokenized versions of a stock begin to affect the underlying company’s market dynamics or investor relations. Consumer protection groups have raised concerns about the removal of shareholder rights, arguing that retail investors may not fully understand the difference between owning a token that tracks a stock and owning the stock itself.

Regulatory implementation timelines remain uncertain, and the framework could face legal challenges or congressional scrutiny before taking effect. The tokenized equities market, while growing rapidly, still represents a fraction of global equity trading volume, and whether institutional adoption will follow regulatory clarity or require additional infrastructure development remains an open question.

About XT Exchange

Founded in 2018, XT Exchange is a leading global digital asset trading platform, serving over 12 million registered users across more than 200 countries and regions, with an ecosystem reach exceeding 40 million. XT Exchange supports 1,300+ tokens and 1,300+ trading pairs, offering a wide range of trading options, including spot, margin, and futures, alongside a secure RWA (Real World Assets) marketplace. Guided by the vision “Xplore Crypto, Trade with Trust,” the platform strives to provide a secure, trusted, and intuitive trading experience.

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