SEC Chairman Paul Atkins announced that the committee is "about to release" a new rule called the "Innovation Exemption" - allowing tokenized stocks to be traded legally in the United States.

Written by: Conflux

This matter has already been "put on hold" once.

On April 21, SEC Chairman Paul Atkins delivered a speech at the Economic Club of Washington, announcing that the committee is "about to release" a new rule called the "Innovation Exemption" - allowing tokenized stocks to be traded legally in the United States. The market was excited about this for nearly a month.

In May, the exemption was quietly put on hold. Executives from Nasdaq, the New York Stock Exchange, and Cboe collectively pressured during a closed-door meeting, believing that this framework would create a "parallel trading venue" outside the existing market monitoring system. The plan originally scheduled for release around May 18 by the SEC was indefinitely postponed.

On June 17, it was reported that the SEC is preparing to reintroduce this policy in the coming weeks.

This time, will it really be implemented?

What precisely does the "Innovation Exemption" intend to loosen?

It is necessary to clarify one thing first: as of now, there are no official documents released regarding the "Innovation Exemption," and all details are based on market news and speculative interpretations. This remains a policy direction still in the works and not yet fully formed.

According to the currently leaked information, the idea behind this exemption is to establish a regulatory sandbox that allows eligible issuers and platforms to provide tokenized stock services under lighter disclosure and operational requirements - for example, allowing stocks like Apple, Tesla, and Nvidia, which are already publicly traded on U.S. stock exchanges, to be traded 24 hours a day in the form of blockchain tokens, supporting fractional shares, with near real-time settlement.

SEC Commissioner Hester Peirce's statements on social media are quite critical: she expects this exemption will only allow tokenized stocks that grant the same rights and protections as traditional stocks - which means if the proposal eventually materializes, the regulatory baseline is likely that "watered-down" tokenized stocks will not be allowed to flood the market.

It sounds quite cautious already. But even so, this draft was still blocked. The ones who blocked it were not ordinary crypto skeptics but the very institutions operating the U.S. stock market itself.

Reasons for the pause

In May, executives from Nasdaq, the New York Stock Exchange, and Cboe raised strong objections to this draft during a closed-door meeting, leading to the indefinite postponement of the planned release.

There is a reversal here that is easy to overlook: Nasdaq and the New York Stock Exchange are not mere bystanders in this wave of tokenization, much less opponents. Nasdaq received SEC approval in March 2026 to advance its own tokenized securities program - it is one of the first institutions to obtain a pass in this wave.

But the problem lies exactly here: Nasdaq's plan and the "Innovation Exemption" are fundamentally not the same path.

Nasdaq's tokenization plan requires that all transactions be completed within the exchange, maintaining full shareholder rights, and is built on top of DTCC's enterprise-level blockchain - essentially retaining the compliance framework of the existing exchanges, only replacing the underlying ledger with blockchain. This path is slow, costly, and every step must comply with the existing National Market System (NMS) routing rules and Consolidated Audit Trail (CAT) reporting requirements.

The "Innovation Exemption" aims to do something different: allow third-party platforms like Coinbase and Robinhood to independently issue tokenized stocks under lighter disclosure and operational requirements, without needing to be integrated into the entire Nasdaq exchange system. If this path is opened up, it means someone can provide something almost identical to what Nasdaq offers but at a lower cost and faster speed, without following the slow and expensive route taken by Nasdaq.

The more realistic issue is: if a stock is traded simultaneously on the New York Stock Exchange, Nasdaq's own tokenized platform, and a third-party platform operating under the "Innovation Exemption," the price information will be fragmented into multiple unrelated liquidity pools - potentially leading to dangerous price tracking errors and risks of shadow short selling during liquidity exhaustion. This is the reason publicly put forth by Nasdaq. But what is hidden beneath the surface is that they have just invested real capital in their compliance path and will not want to see a more effortless shortcut grow parallel to it.

Those who support tokenization have personally called off a tokenization plan - not because they oppose tokenization but because this plan could devalue the hard-won path they have taken.

Exemption paused, but funds haven't

It's easy to press the pause button, but it cannot stop the underlying flow of funds.

The market size for tokenized stocks is expected to grow from a "few million dollars level" at the end of 2024 to over $6.4 billion by mid-June 2026. According to CoinGecko, the number of tokenized stock assets has increased from 14 at the end of January 2024 to 478 by the end of May 2026, an increase of over 3300% - making it the fastest-growing category in cryptocurrency over the past two years.

The institutions haven't waited. Citigroup plans to launch tokenized shares of unlisted companies like OpenAI and Anthropic, initially targeting overseas investors; Coinbase has publicly announced that it will immediately launch 1:1 physically-backed tokenized stocks in the U.S. once U.S. regulations allow; platforms like Robinhood, Kraken, and Binance have already launched similar products outside of the U.S., waiting for the moment domestic policies open the floodgates.

More notably, the SEC quietly advanced an independent market structure proposal last week, intending to abolish two rules in the NMS that have been in place for nearly twenty years: 611 and 610(e). Some analysts interpret this as a signal: even if the "Innovation Exemption" is stuck in place, the SEC is already laying the groundwork for the necessary underlying rule changes to integrate tokenized assets into the mainstream trading system.

The pause button only stopped the release date of a document, not the direction of this matter.

Who supports, who opposes

This matter is easily simplified into "crypto circle vs traditional finance", but the reality is not so straightforward.

The support camp includes crypto-native platforms like Coinbase, Robinhood, and Kraken - analyst Brian Vieten believes this will accelerate the transition of the U.S. financial system (which accounts for over half of the global financial system) from traditional rails to on-chain rails. But the support camp also includes Nasdaq and the New York Stock Exchange; they just want a tokenization path led by themselves, preserving complete shareholder rights, integrated into the existing compliance framework of exchanges - rather than a path allowing third-party platforms to circumvent this framework with lighter methods, competing directly with themselves.

In the opposition camp, Citadel Securities and SIFMA (Securities Industry and Financial Markets Association) are not ideologically opposed, but express process-level concerns - calling for formal regulatory legislative procedures rather than advancing through a relatively temporary exemption that can be revoked at any time. This concern points to a real vulnerability: the regulatory framework based on exemptions is itself revocable, and once a platform loses regulatory approval, users holding related tokenized assets may suddenly find themselves in a situation with no recourse.

Support and opposition is not divided along the lines of new and old camps, but rather stems from the same group of people who have not yet come to an agreement on "how to do it safely".

Waiting for a door to open

According to the currently leaked direction, the stocks that can be traded in the short term are mainly those already listed on U.S. exchanges, such as Apple, Tesla, and Nvidia; international stocks and IPO allocations of a more complex nature are seen as longer-term goals - but this precisely corresponds to the recent historic largest IPO completed by SpaceX, as well as the expectations of OpenAI and Anthropic planning to go public.

If we put this matter into the context of the past few months: Nasdaq and the New York Stock Exchange have each obtained approval for tokenized trading rules; DTCC announced that it will gradually incorporate $114 trillion of custody assets into the tokenization roadmap; SpaceX's IPO has brought on-chain pre-list pricing into the mainstream view for the first time - these actions are converging in the same direction, and the "Innovation Exemption" is currently the only puzzle piece that is stuck in place yet fully watched by everyone.

It has already been let down once. But the one who let it down is also waiting for this door to open.