- The SEC is considering a plan for blockchain-based stock trading on authorized crypto platforms.
- Nasdaq, Coinbase, and others advocate for tokenized equities as adoption accelerates.
- The tokenized stock market could reach $1.3T if 1% of global equities transition to blockchain.
The US Securities and Exchange Commission (SEC) is reportedly drafting a proposal to permit blockchain-registered stock trading on cryptocurrency exchanges, indicating a major step toward integrating digital asset technology into conventional markets.
If approved, the plan would allow investors to trade tokenized shares of publicly listed companies on regulated crypto platforms, as reported by The Information.
Although still in the preliminary stages, this initiative highlights the increasing regulatory acceptance of tokenization — the creation of blockchain-based tokens representing ownership of traditional assets.
Regulators show willingness to innovate
SEC Chair Paul Atkins recently referred to tokenization as an “innovation” that the agency ought to foster rather than inhibit.
“We should focus on advancing innovation in the marketplace,” Atkins stated, suggesting that tokenized assets could improve access to financial markets and reduce costs.
This initiative is gaining momentum in the industry.
Nasdaq has requested SEC approval for a rule change enabling it to list tokenized securities, while Coinbase is seeking regulatory approval to provide tokenized equities on its platform.
Retail platforms like Robinhood and Kraken have started offering tokenized stock products to their users.
These developments reflect a broader shift among regulators and market players toward embracing blockchain technology in securities markets.
However, substantial concerns remain regarding market structure, investor protections, and oversight as tokenization approaches mainstream acceptance.
Concerns from traditional finance
The SEC’s apparent readiness to explore tokenized equities has faced criticism from established financial institutions.
In a July letter to the agency’s Crypto Task Force, Citadel Securities urged regulators to ensure that tokenized securities genuinely provide value to markets rather than exploiting regulatory gaps.
“Tokenized securities must succeed by delivering true innovation and efficiency to market participants, not through self-serving regulatory arbitrage,” the firm warned.
This skepticism illustrates a wider tension between traditional finance and the emerging digital asset sector.
While tokenization presents the possibility of quicker settlements, increased transparency, and reduced costs, critics caution about potential risks if the technology progresses without adequate protections.
Momentum builds for stock tokenization
Despite these concerns, tokenized equities are increasingly gaining traction.
Data indicates that over $31 billion in assets have been tokenized, although stocks make up only around 2% of that total.
Nonetheless, the value of tokenized equities has nearly doubled within the past 100 days, indicating a surge in adoption.
A recent report from Binance Research likened the growth of tokenized stocks to the early expansion of decentralized finance (DeFi) in 2020 and 2021.
The report suggested that tokenized equities could soon hit an “inflection point” in the broader transition toward hybrid finance, where blockchain technology coexists with traditional markets.
Binance projects that the market for tokenized stocks could eventually exceed $1.3 trillion if just 1% of global equities shift to blockchain networks.
As regulators consider their next steps, the SEC’s upcoming proposal will be closely monitored by market players.
The outcome could determine whether tokenized stocks stay a niche offering or evolve into a revolutionary force in global equity markets.
