May 18 - The Trump administration is preparing to roll out a framework that would permit trading in tokenized or digital versions of securities, according to people familiar with the matter. Regulators are said to be close to issuing an "innovation exemption" that would apply to tokenized stocks, with the Securities and Exchange Commission expected to release the guidance as soon as this week.
The proposed shift would extend stock trading to crypto-native venues and could create a regulatory avenue for transactions to occur outside of conventional stock exchanges. Under the plan, tokens representing shares would be traded on decentralized crypto platforms rather than through traditional exchange infrastructure.
Reportedly, the SEC is inclined to allow certain tokens to trade even if those tokens lack backing from, or the consent of, the public companies whose shares they seek to track. As a result, holders of these tokens might not receive customary shareholder entitlements - for example, voting rights or dividend participation could be absent.
The development comes amid related legislative movement in Washington. A Republican-led Senate Banking Committee has advanced measures aimed at clarifying U.S. regulatory standards for cryptocurrencies, signaling parallel efforts by lawmakers to shape the rules governing digital-asset markets.
The precise contours of the innovation exemption and how it would interact with existing securities laws and market structure requirements have not been released publicly. Regulators have not provided an immediate comment in response to requests for clarification.
Context and implications
The plan under discussion would effectively separate the economic function of a security from the traditional mechanisms that confer ownership and governance. Token holders could gain exposure to the price movements of a company's shares without obtaining the legal rights normally associated with share ownership.
Because these tokenized instruments are intended for trading on decentralized platforms, the initiative would also shift some market activity to venues that operate under different technical and operational models than centralized exchanges.
At the same time, legislative activity in the Senate banking panel indicates that Congress and regulators are moving in parallel to address how cryptocurrencies and tokenized assets fit into the U.S. regulatory framework.
Note: The information in this report reflects the details available from the sources cited by informed parties and the status of regulatory action as described by those parties at the time of reporting.