SEC Reviewing Plan To Allow Blockchain-Based Stock Trading On Exchanges

The United States Securities and Exchange Commission (SEC) is reviewing plans to allow blockchain-based versions of publicly traded stocks on approved cryptocurrency exchanges. Several platforms, including Nasdaq, Robinhood, Coinbase, and Kraken, are seeking regulatory approval or already testing tokenized stock products. SEC Exploring Blockchain Versions Of Publicly Traded Stocks The United States Securities and Exchange Commission (SEC) is reviewing a proposal that could allow blockchain-based versions of publicly traded stocks on cryptocurrency exchanges. The reports first emerged on X, and while they remain in early development, they have created a wave of attention within the SEC and anticipation within the crypto community. Nate Geraci posted about the developments on X, stating, “NYSE, *the world’s largest stock exchange*, just met w/ SEC Crypto Task Force… The topic? You guessed it. Tokenized equities. I know you’re paying attention now.” The development could be a significant step for tokenized assets, allowing investors to buy and sell shares using blockchain technology instead of traditional stock exchanges. Details Of The Proposal The proposed framework would allow investors to buy and sell stock tokens on approved crypto platforms. The tokens would represent legal ownership of the stocks in publicly traded companies. All transfers would be recorded on the blockchain instead of traditional clearing systems. SEC Chair Paul Atkins has praised tokenization, calling it an “innovation the agency should advance.” He also urged regulators to focus on promoting innovation in the marketplace, noting that tokenized stocks could improve market access and reduce costs. Crypto and financial platforms are already preparing for tokenized stocks. Nasdaq has requested the SEC to approve a rule change that would allow it to list tokenized securities. Cryptocurrency exchange Coinbase is also preparing a licensing application to operate as a broker for digital securities. Meanwhile, Robinhood and Kraken have already begun offering tokenized stock products and have conducted early experiments with synthetic stock tokens in overseas markets. Industry Raises Concerns Traditional finance companies have raised concerns regarding the proposal. Citadel Securities submitted a letter to the SEC’s Crypto Task Force in July, urging caution. The firm asked regulators to ensure that tokenization delivers genuine benefits instead of exploiting regulatory gaps. Citadel stated that tokenized securities must achieve success through innovation and efficiency, and warned against what it called “regulatory arbitrage.” However, despite industry concerns, momentum and interest in tokenization are growing. Earlier this year, BlackRock, the world’s largest asset manager, announced the creation of a tokenization division. The move indicated growing confidence in blockchain-enabled finance among institutional players. Several pilot projects around tokenized stocks exist in Europe and Asia, where regulated exchanges are conducting real-time settlement of digital securities. Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice