SEC Prepares Framework for 24/7 Trading of Tokenized U.S. Stocks

The SEC is preparing a regulatory framework that could allow tokenized U.S. stocks to trade around the clock, moving blockchain-based equities closer to regulated 24/7 markets.

SEC Prepares Innovation Exemption for Tokenized Stocks

The U.S. Securities and Exchange Commission is working on an “innovation exemption” aimed at creating a regulatory path for tokenized securities. The proposal could allow qualified platforms to trade digital versions of U.S. stocks on blockchain networks under tailored SEC requirements.

SEC Chair Paul Atkins has backed the exemption as part of a wider effort to move parts of U.S. financial markets on-chain. The framework could support continuous trading and blockchain settlement while keeping tokenized securities within federal securities rules.

The exemption has not taken effect. The SEC recently canceled a meeting that was expected to address parts of its wider crypto regulatory program because of a scheduling issue, leaving existing securities requirements unchanged.

24/7 Trading Could Change U.S. Stock Market Hours

A framework for tokenized stocks could eventually remove one of the main restrictions of traditional U.S. equity markets: fixed trading hours. Blockchain networks can process transactions continuously, allowing eligible tokenized securities to trade during nights, weekends and holidays.

The structure could also support faster settlement than conventional stock market systems. However, the SEC still needs to address custody, investor protection, market surveillance and how tokenized shares interact with existing clearing systems.

U.S. market infrastructure has already started moving toward tokenization. The SEC previously provided no-action relief for a DTCC tokenization pilot covering selected U.S. equities, ETFs and Treasury securities. Nasdaq has also pursued infrastructure for trading tokenized securities.

Tokenized stocks would remain securities regardless of whether ownership records sit on a blockchain. SEC materials have also distinguished between issuer-backed tokenized securities and third party models, making the structure of each product important for determining investor rights.

Wall Street and Crypto Firms Prepare for Tokenized Markets

The regulatory push comes as traditional exchanges, clearing firms and crypto companies develop infrastructure for blockchain-based securities. Market participants are examining how tokenization could work alongside existing brokerage, custody and settlement systems.

The SEC is also considering broader changes to market structure. An August 11 submission from Ondo Finance supported proposed Regulation NMS changes that could give alternative trading models greater room alongside traditional continuous order books.

The planned innovation exemption remains under development, meaning 24/7 tokenized U.S. stock trading has not received blanket approval. Still, the SEC’s work provides a potential regulatory route for continuous on-chain equity trading as U.S. financial markets expand their use of blockchain infrastructure. 

For institutional investors, exploring the best RWA issuers for institutional investors can clarify how structured on-chain products operate under U.S. regulatory.