The US Securities and Exchange Commission is reportedly preparing an 'innovation exemption' for blockchain-based tokenized stock trading, allowing third-party tokens to track the share prices of public companies even without their consent. The exemption could come as early as this week, opening up trading of stocks like Nvidia (NVDA), Google (GOOGL), and Tesla (TSLA) on decentralized crypto platforms.
SEC Commissioner Hester Peirce led the push for this exemption, which would require third-party tokens to offer benefits like voting rights and dividends, similar to common stock. The move follows feedback from hundreds of market participants.
Wall Street is showing growing interest in tokenization for its potential to improve trading and settlement efficiency. The New York Stock Exchange's parent company, Intercontinental Exchange, announced plans for a 24/7 tokenization platform. Bullish, the crypto exchange led by former NYSE president Tom Farley, also expanded its tokenization capabilities with its $4.2 billion acquisition of Equiniti.
Despite the expected exemption, some SEC officials oppose the decision. Brett Redfearn, president of Securitize, warned that enabling tokenization without issuer involvement could lead to fragmentation and uncertainty over share values.
Tokenized trading is also expanding into pre-IPOs, though companies like OpenAI and Anthropic have opposed unauthorized tokenized stocks tracking their valuations.