SEC Signals Openness to Tokenized Equities Amid Push for Blockchain-Based Stock Trading

Regulators Weigh Risks and Benefits of On-Chain Securities Models

TL;DR

• SEC exploring frameworks for trading blockchain-based versions of stocks on crypto exchanges.
• Commissioner Hester Peirce says tokenized securities remain subject to U.S. securities laws.
• Tokenized assets market stands at $31B, with projections up to $2T by 2030.

The U.S. Securities and Exchange Commission is examining proposals that would allow blockchain-registered versions of stocks to trade on crypto exchanges, a development that could redefine the relationship between traditional equities markets and digital asset infrastructure. SEC Chair Paul Atkins has described tokenization as an “innovation” that warrants encouragement rather than restriction, framing it as a potential way to expand access and reduce costs for investors. The move comes as Nasdaq, Coinbase, and other market players pursue rule changes and regulatory clearance to list or offer tokenized securities alongside conventional equities. Nasdaq has filed for permission to integrate tokenized securities under its existing framework, while Coinbase’s legal team has labeled tokenized equities a “huge priority.” Platforms such as Robinhood and Kraken already provide tokenized stock products in limited jurisdictions, signaling growing momentum in this direction.

SEC Commissioner Hester Peirce has emphasized that tokenization does not exempt an asset from the scope of securities law, making clear that “tokenized securities are still securities.” She urged market participants to engage directly with the agency, stating that regulators are willing to work with issuers that aim to tokenize. Her remarks also highlighted a critical challenge: how tokenized securities interact with their off-chain equivalents, since the legal and technical architecture of these assets determines their regulatory classification. She underscored that blockchain technology does not alter the fundamental legal nature of the asset, echoing her earlier published statement titled “Enchanting, but Not Magical.”

Market figures underscore both the promise and the risks of the shift. Tokenized assets currently represent roughly $31 billion, with tokenized equities making up about $714 million of that market. Projections from McKinsey estimate tokenized markets could reach close to $2 trillion by 2030, reflecting expectations of institutional adoption at scale. Analysts caution, however, that liquidity remains a major hurdle, with many tokenized asset classes suffering from thin trading volume and restricted participation. Traditional finance firms, including Citadel Securities, have warned regulators that tokenization must deliver genuine efficiencies and not simply function as a vehicle for regulatory arbitrage.

Regulatory adjustments are also underway on custody. The SEC’s Division of Investment Management has issued a no-action letter stating that investment advisers using state trust companies for custody of crypto, including tokenized securities, would not face enforcement action if they adhere to due diligence and investor safeguard standards. The agency described the measure as an interim step toward modernizing custody rules, while Peirce called it a helpful clarification but warned that long-term reforms require formal rulemaking.

Market participants are moving quickly to test real-world use cases under this evolving framework. Republic, a U.S.-based investment platform, recently announced plans to tokenize equity in Animoca Brands on Solana, aiming to broaden investor access and enable compliant secondary trading. Such projects demonstrate how tokenization could bridge private markets, digital infrastructure, and regulated investor protections.

The convergence of regulatory signals and market initiatives suggests that while the SEC is not offering a blanket greenlight, it is building pathways for tokenized equities to coexist with existing markets. The friction points ahead are clear: aligning blockchain tokens with clearing and settlement systems, ensuring that token holders enjoy equal rights as traditional shareholders, and preventing fragmented markets. As debate intensifies, the future of tokenized assets sits at the intersection of innovation, oversight, and investor protection — a space where both crypto price index metrics and coin market cap trends will increasingly be shaped by regulatory clarity and institutional engagement.

This article has been refined and enhanced by ChatGPT.