The US Securities and Exchange Commission is preparing to introduce a new policy that would allow crypto companies to offer blockchain-based tokenized stock trading, according to a Reuters report — a development that could have significant implications for the structure of traditional US equity markets if implemented.
What's being proposed
According to SEC Chairman Paul Atkins, companies would be permitted to experiment with new digital asset business models, including the tokenization of US stocks, without fully complying with existing disclosure and investor protection rules. This experimental, lighter-touch regulatory approach would represent a significant departure from how equity trading has traditionally been regulated in the US, potentially allowing crypto-native platforms to offer stock exposure through blockchain rails alongside or in competition with traditional exchanges.
Industry pushback: Citadel Securities and SIFMA raise concerns
The proposal has already drawn opposition from established financial market participants. Citadel Securities and SIFMA — the Securities Industry and Financial Markets Association, representing broker-dealers, banks, and asset managers — have argued that the changes could divert liquidity away from traditional markets and create regulatory arbitrage risks, where tokenized stock platforms could operate under lighter compliance burdens than traditional exchanges and broker-dealers while competing for the same order flow.
The regulatory arbitrage concern is a familiar one in financial market structure debates: if tokenized stock platforms can offer similar economic exposure to traditional equities with fewer disclosure and investor protection requirements, market participants may migrate toward the less-regulated venue, potentially undermining the protections that traditional securities regulation has built over decades — or alternatively, creating genuine innovation and efficiency gains that benefit investors through lower costs and faster settlement.
As of the report, the SEC has not made any public comments on the matter.
Why this matters for crypto markets
This development would represent a significant acceleration of the "Great Convergence" theme that BlackRock's Jay Jacobs described earlier this week — the merging of traditional finance and crypto infrastructure. It also builds directly on momentum already visible in the market: Kraken's xStocks platform has processed more than $25 billion in cumulative tokenized equity trading volume within eight months of launch, including tokenized access to SpaceX shares ahead of its traditional IPO. Ondo Global Markets has surpassed $1 billion in total value locked offering tokenized stocks and ETFs. Pre-IPO perpetual futures volumes have surged from $1 billion to $22 billion in weeks, with Binance establishing itself as the largest venue.
SEC approval of a formal framework for tokenized stock trading — rather than the current patchwork of offshore and crypto-native platforms operating in regulatory gray areas — would provide the legitimacy and regulatory clarity that could dramatically accelerate institutional and retail adoption of tokenized equities. It would also validate Standard Chartered's Geoffrey Kendrick's investment thesis behind his $100 UNI price target, which rests specifically on tokenized real-world assets flooding into DeFi protocols as the category matures and gains regulatory acceptance.
For traditional market structure, the implications are genuinely significant. If tokenized stocks can trade 24/7 on blockchain rails with faster settlement than the traditional T+1 system, and if crypto-native platforms can offer this with lower compliance overhead, the liquidity migration concerns raised by Citadel Securities and SIFMA may prove well-founded — representing a genuine threat to the economics of traditional market-making and exchange operations that have been built around current regulatory structures.
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