Sec Pushes Plan To Make Stocks Trade Like Crypto On Blockchain

What Happened

Crypto platforms such as Coinbase and Robinhood have also shown strong interest, viewing tokenization as an opportunity to expand their offerings and provide investors with broader access to equities.

Market Context

While the initiative has gained support from crypto exchanges and fintech platforms, it faces pushback from traditional financial institutions that profit from the existing market structure.

According to a report by The Information, the SEC is already consulting with market participants on regulatory changes that would make these tokenized securities possible.

If approved, this would mark the first time U.S. markets officially recognize blockchain-based stock trading.

Large banks, brokerages, and clearinghouses like Citadel Securities, with over $95 billion in assets under management (AUM), argue that tokenization threatens their role in the trading and settlement process.

Just a month ago, the World Federation of Exchanges (WFE), a group of stock exchanges, specifically addressed a letter to the U.S. SEC and the European Securities and Markets Authority (ESMA) to tighten oversight on ‘tokenized stocks.’

Per Reuters, the WFE letter raised concerns about blockchain-based stocks, claiming these products “mimic” equities without offering shareholder rights or market trading safeguards.

The coalition emphasized that blockchain-based products are not equivalent to existing stock tokens as marketed.

Despite strong opposition from Wall Street, Hester Peirce, the Republican commissioner on the SEC, said that any new models for trading securities known as “tokenization” must still meet securities regulations.

Additionally, the push for blockchain and crypto integration in the financial market is part of a broader “crypto-friendly” agenda under the current administration, with backing from some industry players.

Atkins described the gathering as “a turning point for U.S. financial markets,” indicating a shift from years of siloed approaches.

Why It Matters

The exchange proposed that tokenized assets be clearly labeled so that clearing firms and the Depository Trust Company (DTC), which handles settlement, could process orders the same way they do with conventional stocks.

Details

The U.S. Securities and Exchange Commission (SEC) is reportedly developing a plan to allow stocks to trade like crypto on the blockchain, treating shares of companies like Apple, Tesla, and Nvidia as digital tokens similar to how cryptocurrencies operate.

SEC Plan to Make Stocks Trade on Blockchain Gets Nasdaq Backing

Nasdaq has already submitted a rule change filing to permit listed equities and ETPs to trade in tokenized form, with the SEC’s public-comment period ending October 14.

SEC Commissioner Hester Peirce, recognized for her pro-crypto position, confirmed that the regulator is “ready to work with firms” seeking to tokenize traditional assets.

Despite the progress, resistance is growing from Wall Street incumbents.

“Tokenized Securities Are Still Securities”—Peirce Sets the Rules

“As powerful as blockchain technology is, it does not have magical abilities to transform the nature of the underlying asset,” she said, adding that “Tokenized securities are still securities.”

This aligns with Nasdaq’s recent submission to the SEC, which states that tokenized shares should carry the same rights and protections as their underlying securities.

Financial giants, including BlackRock, Franklin Templeton, and KKR, have already experimented with tokenizing portions of their funds.

However, most tokenized shares to date have been issued by third parties rather than the companies themselves, creating legal and regulatory complications.

JPMorgan Chase recently told clients that tokenization of bonds and other assets has yet to gain traction beyond crypto-native firms.

SEC Chair Paul Atkins recently spoke at the SEC–CFTC Joint Roundtable on Regulatory Harmonization and affirmed that crypto remains the agency’s top priority.