The agency’s Investor Advisory Committee voted to recommend a regulated path forward for blockchain-based stock trading, as Chairman Atkins signals a formal exemption is imminent
The U.S. Securities and Exchange Commission’s Investor Advisory Committee has voted to recommend the agency move forward on a regulatory framework for tokenized securities, offering cautious but meaningful institutional endorsement for one of the more consequential shifts under consideration in American capital markets.
The committee voted to support narrow exemptions for blockchain-based equity trading, on the condition that any such activity comes with mandatory disclosures, routine outside supervision, and a requirement that trading of tokenized equity securities ensures all investors receive the best terms for their orders. The committee’s membership includes veterans from major trading firms, institutional investors and academics.
The core appeal of tokenization lies in its ability to ease the settlement process. Traditional stock trading routes transactions through brokers, transfer agents and centralized settlement databases, a chain that can take a day or more to complete. By placing a stock on-chain, the delivery of the tokenized security and the payment can happen as a single transaction, with ownership records embedded directly into a single blockchain, according to the committee’s recommendation document.
SEC Chairman Paul Atkins, speaking at the meeting, welcomed the committee’s recognition that tokenization can enhance settlement efficiency, reduce settlement risk, and eliminate unnecessary intermediaries.
Atkins signaled that formal action is close. “I expect the Commission to soon consider an innovation exemption to facilitate limited trading of certain tokenized securities with an eye toward developing a long-term regulatory framework,” he told attendees, adding that the agency’s Crypto Task Force has hosted several roundtables, met with hundreds of market participants, and solicited broad public feedback over the past thirteen months. The exemption, he noted, would be limited in both time and scope.
The committee was careful to flag the risks alongside the opportunity. “The most significant risk associated with the tokenization of equity securities is that these reforms or grants of exemptive relief could introduce new risks that investors do not understand and impose higher costs that outweigh the benefits of tokenization,” according to the approved recommendation document.
The vote follows a sequence of regulatory moves that have steadily narrowed the uncertainty around tokenized assets. In January, SEC staff issued a joint statement affirming that tokenized securities remain subject to federal securities law regardless of whether ownership is recorded on-chain or off-chain. In early March, the Commission filed a broader crypto asset taxonomy framework with the White House Office of Information and Regulatory Affairs, initiating interagency review for the first time at the Commission level.