SEC Pauses Plan for Crypto Tokenized U.S. Stocks

The Securities and Exchange Commission has paused a proposed exemption that would have allowed crypto firms and decentralized finance platforms to issue and trade tokenized versions of U.S. stocks. The agency is reviewing feedback from exchanges, trading venues and other market participants before deciding on a final framework.

The draft exemption would have treated blockchain-based tokens representing shares in companies such as Apple and Tesla as securities while permitting trading outside traditional stock exchanges. Supporters said the change could enable 24-hour trading, faster settlement and easier fractional ownership of equities.

Officials at stock exchanges, trading venues and other market participants raised concerns that parallel crypto markets could divert trading volume from established exchanges, reducing liquidity on primary markets and weakening price discovery. They warned that fragmented liquidity across multiple venues could increase volatility and make risk management more complex for market makers.

Investor protection was also a central issue. Tokens issued by third parties without company consent may not carry full shareholder rights such as voting or dividend entitlements. Market participants sought clarity on how disclosure, custody and settlement rules would apply to tokenized equity products.

Tokenized real-world assets have expanded rapidly. The distributed asset value of tokenized assets reached about $33.8 billion, a roughly 1,600% increase over two years, with tokenized equities accounting for more than $1 billion of that total. Ethereum is the leading platform for these tokens, followed by Solana, and several large asset managers have launched on-chain funds and related projects.

The SEC, led by Chair Paul Atkins, engaged with hundreds of participants while developing the draft framework. Agency officials are reviewing the feedback and refining legal and operational details. No new timetable has been announced; officials say the proposal remains under review and could be reissued later this year.

If the SEC reissues a revised framework, it would address questions raised during consultations about market structure, settlement processes and investor protections, and any final rule would affect how trading venues, custody arrangements and securities laws apply to on-chain assets.