The Trump administration is poised to roll out a plan for trading digital versions of securities that could reshape the landscape of the American stock market as it continues to loosen the rules for free-wheeling crypto markets.
 
The Securities and Exchange Commission is expected to release its so-called innovation exemption for tokenized stocks as soon as this week, creating a new framework for betting on the fortunes of publicly traded companies, according to people familiar with the matter.
 
In a surprise move, the SEC is leaning toward a decision to allow the trading of tokens that do not have the backing or consent of the public companies whose shares they track, the people said. These “third party” tokens — effectively a novel way to speculate on the direction of the share price — would be tradeable on decentralized crypto platforms, though not all such instruments necessarily carry the same benefits as normal stocks, such as voting rights or dividends. Under the SEC’s proposal, platforms that fail to provide those benefits would lose the right to list the tokens.
 
The move would mark one of the most significant regulatory tests yet of whether stock trading can migrate onto crypto infrastructure without the protections that govern traditional equity markets. By allowing third parties to create tokenized versions of public-company shares without issuer consent, the SEC would open a multiyear experiment in whether parallel markets for listed stocks can function outside parts of the regulatory framework designed to ensure fair pricing, transparency and investor protection.
 
The SEC has said tokenized securities fall into two categories: those tokenized by or on behalf of issuers, and those tokenized by third parties that are not directly affiliated with the issuers. SEC officials are still working on the exemption and details could change before it is released. An SEC spokesperson said the agency has met with hundreds of market participants and sought broad feedback on how to calibrate its rules for new types of trading.
 
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Parts of the regulatory framework governing US stock trading would not apply to third-party tokenized securities, which are essentially synthetic vehicles intended to mirror the shares of public companies. The exemption covers tokens traded on decentralized finance platforms, or DeFi, a $130 billion corner of crypto where investors trade, borrow and lend digital assets over protocols that run on automated code with minimal human intervention.
 
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