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The U.S. SEC is preparing an "innovation exemption" framework for tokenized stocks that could allow third parties to issue blockchain-based tokens tied to publicly traded equities without authorization from the underlying companies, according to Bloomberg. The proposal, which could be introduced as soon as this week, would also permit these stock-linked tokens to trade on DeFi platforms.
Why it matters
The exemption would lower the structural barrier to entry for tokenized equity — issuers would not need the blessing of the underlying public company, and DeFi venues could list the products without a traditional broker-dealer rail. That is a meaningful departure from the current posture, where tokenized stock products have largely been limited to wrapped offerings run by issuers themselves or licensed intermediaries.
Market impact
The framework carries a clear condition: platforms risk losing eligibility if the tokens do not provide holders with shareholder rights such as voting or dividends. That carve-out keeps the fundamental rights of equity ownership tied to the token design, and gives issuers an incentive to mirror the underlying stock's economic and governance profile — not just its price. The structure signals a regulator willing to experiment with on-chain equity rails, while still anchoring the product to the protections that define a share of stock.
Frequently asked questions
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What is the SEC's "innovation exemption" for tokenized stocks?
It is a proposed framework that would allow third parties to issue blockchain-based tokens tied to publicly traded equities — without authorization from the underlying companies — and trade them on DeFi platforms. The proposal could be introduced as soon as this week.
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Do tokenized stock holders get shareholder rights under the proposal?
The framework requires that platforms provide holders with shareholder rights such as voting and dividends. Platforms that list tokens without those rights risk losing eligibility under the exemption.
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Does the underlying public company need to approve a tokenized version of its stock?
No. According to Bloomberg, the proposal would permit third parties to issue equity-linked tokens without authorization from the underlying public companies.
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Can tokenized stocks trade on DeFi platforms under the exemption?
Yes. The framework would explicitly allow the trading of these stock-linked tokens on DeFi platforms, provided the platforms maintain the shareholder-rights condition.
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What happens if a DeFi platform lists tokenized stocks without shareholder rights?
The platform could lose its eligibility under the exemption, meaning it would no longer be able to rely on the safe-harbor framework to list the products.
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