The US Securities and Exchange Commission (SEC) has approved the trading of tokenised stocks, marking a significant step towards integrating cryptocurrency firms into traditional equity markets. Tokenised stocks are blockchain-based digital representations of conventional shares, enabling continuous trading beyond standard market hours, potentially lowering transaction costs and simplifying the use of shares as collateral.

This regulatory development comes amid ongoing debate over the legitimacy and structure of tokenised stock offerings, particularly from companies offering these tokens without issuer approval. Retail brokerage Robinhood, which provides tokenised stocks outside the United States, has faced criticism from some issuers. Adam Aron, CEO of the cinema chain AMC, publicly denounced Robinhood’s practice on social media platform X, stating that AMC has no affiliation with the tokenised stock offerings and described them as a “quasi-fake market.”

Under the SEC’s new innovation exemption, companies wishing to offer tokenised stocks within the United States must notify the issuers of the shares involved and provide them an opportunity to object. Moreover, the tokenised stocks must grant holders the same rights and privileges as traditional shareholders, including voting rights, and trading in the tokens must halt simultaneously with any suspension on regular exchanges.

This rule change requires firms such as Robinhood and Payward, owner of the Kraken exchange, to modify their existing models, which currently operate overseas without issuer consent and do not confer direct shareholder rights to token holders. Presently, many tokenised stock products function as derivatives linked to a company's stock price, lacking direct ownership benefits. These firms will still be able to offer such derivative-like products to customers outside the United States.

The SEC’s order also provides trading venues launching tokenised stock services a five-year exemption from certain regulatory requirements applicable to established exchanges like Nasdaq and the New York Stock Exchange. The regulator’s move aims to foster innovation in digital asset markets as formal US legislation on cryptocurrencies remains stalled. In particular, the Clarity Act, a proposed Congressional bill that sought to establish clearer crypto regulations, recently failed in the Senate amid disagreements over provisions related to restrictions on former President Donald Trump’s interactions with the digital asset industry.

Crypto companies are increasingly competing with traditional financial exchanges by promoting tokenised stocks as a step towards a future where various asset classes—including stocks, bonds, and commodities—are traded on blockchain platforms around the clock. Some industry voices stress the importance of engaging corporate issuers in this process to maintain the integrity of equity ownership. Carlos Domingo, CEO of Securitize, a firm that assists companies in issuing blockchain-based shares directly, emphasized that tokenisation should “modernise equity ownership, not create a parallel version of it without the company involved.”

Prior to the SEC’s recent guidance, direct issuance of tokenised shares by corporations was limited, indicating the potential for more widespread adoption under the new regulatory framework.