Overview
- The SEC has been reported to be finalizing an "innovation exemption" that could be announced imminently, a move covered widely on May 19 and 20 that would permit supervised testing of tokenized public equities.
- Under the draft framework, third parties could issue tokens that track listed companies without issuer consent, but regulators are discussing rules that would require those tokens to deliver voting rights and dividend access or face removal from trading venues.
- Major market operators are lining up pilots and infrastructure changes: the SEC approved a Nasdaq tokenization rule on March 18, the DTCC plans limited tokenized trades in July and a broader rollout in October, and ICE/NYSE and crypto firms are building competing platforms.
- Critics warn the plan could fragment liquidity and create parallel instruments that confuse investors, and some SEC officials have expressed internal opposition over allowing broad third‑party tokenization because of custody and claim risks.
- The proposal comes as Congress advances the CLARITY Act and industry pilots accelerate, so the exemption would be an initial, time‑limited test whose scope and guardrails could change before any formal release.