The US Securities and Exchange Commission is preparing an “innovation exemption” for tokenized securities, potentially creating a regulatory pathway for stocks to trade on blockchain networks around the clock rather than being confined to conventional US exchange hours.
The initiative is being developed under SEC Chairman Paul Atkins as part of the agency’s broader push to move portions of American securities markets onchain. The exemption would provide selected market participants with relief from certain existing securities-market requirements while they test tokenized securities under defined regulatory conditions. The implications could be substantial. Blockchain infrastructure can support 24/7 trading, fractional ownership and near-instant or atomic settlement, compared with the T+1 settlement cycle currently used for most US equities. However, the SEC has stressed that the contemplated exemption is limited rather than a blanket deregulation of tokenized stocks.
Tokenized Stocks Could Trade After Wall Street Closes
Traditional US equities generally trade during regular exchange hours, with extended sessions available through some brokers. Tokenized securities could remove that structural limitation because blockchain networks operate continuously. SEC Commissioner Hester Peirce said in March that staff were developing an exemption to facilitate the “limited trading of certain tokenized securities.” She also raised questions around atomic settlement, intermediary requirements, investor protections and whether third parties should need permission from companies before creating tokenized versions of their shares.
The SEC has already demonstrated that round-the-clock securities trading is technically compatible with its regulatory framework. Earlier this year, it granted exemptive relief permitting 24/7 trading and instant settlement for tokenized shares of a money-market fund. Applying similar concepts to equities could have much larger consequences. A tokenized Apple or Nvidia share could theoretically change hands on a blockchain during weekends or overnight, with ownership and payment settling almost simultaneously instead of waiting for traditional clearing infrastructure. The SEC’s Investor Advisory Committee has recommended that the agency consider either an innovation exemption or broader rule-by-rule reforms for tokenized equities.
Wall Street and Crypto Are Converging on the Same Market
The exemption arrives as both traditional exchanges and crypto companies race to build tokenized-securities infrastructure. NYSE is developing an onchain settlement platform for tokenized securities, while Coinbase has received authorization in Abu Dhabi to establish a tokenization hub. Crypto-native platforms are also adding functionality needed to handle stocks and corporate actions. The SEC’s approach could determine whether similar activity develops inside the United States or migrates offshore. Atkins has made tokenization a central component of the agency’s Project Crypto agenda. The SEC’s 2026 regulatory agenda specifically calls for providing clarity around how market participants can custody and facilitate trading of tokenized securities onchain.
There are still major questions to resolve. Tokenized shares need clear rules governing custody, shareholder rights, corporate actions, market surveillance and the relationship between an onchain token and the underlying security. Twenty-four-hour trading also creates price-discovery challenges when the primary stock market is closed. The innovation exemption is designed partly to let regulators observe those issues in functioning markets before establishing permanent rules. It also allows the SEC to advance tokenization without waiting for Congress to pass comprehensive crypto legislation. The CLARITY Act remains important for establishing broader statutory boundaries between the SEC and CFTC, but securities regulators already possess considerable authority over how securities trade.
That makes tokenized stocks one area where the SEC can potentially move first. If the exemption succeeds, the significance extends well beyond crypto. It could begin changing one of the fundamental conventions of US capital markets: that stocks trade through centralized venues during defined hours and settle through separate clearing infrastructure. Blockchain turns all three—trading, ownership and settlement—into components of the same programmable system. The SEC’s innovation exemption would provide the regulated testing ground for determining whether that architecture can move from crypto markets into Wall Street itself.
