SEC’s Peirce Says Scope for Tokenized Stocks May Be Limited

The scope of stock tokenization allowed under a forthcoming U.S. Securities and Exchange Commission “innovation exemption” framework may be narrower than previously expected.

Cointelegraph reported on May 22 that SEC Commissioner Hester Peirce wrote on X, formerly Twitter, that the exemption would probably be applied on a limited basis. In her view, the framework would allow only products that digitally represent the same underlying shares investors can already trade in traditional stock markets.

That suggests synthetic tokens that merely track prices without holding the actual shares would probably be excluded. Third-party business models built around stock-linked tokens also stand to face regulatory scrutiny.

Bloomberg previously reported that the SEC could announce as soon as this week an innovation exemption framework permitting trading in tokenized stocks. The plan is reported to include provisions allowing third parties to tokenize listed shares such as Apple Inc. and Tesla Inc. without company approval.

Some in the industry have also raised concerns that tokenized stocks could fragment liquidity. Yoon Seung-sik, a director at Tiger Research, said trading has traditionally been concentrated on centralized exchanges such as the New York Stock Exchange and Nasdaq. If stock tokenization expands, the same asset could trade separately across multiple blockchain platforms, dispersing liquidity.

That could create price differences between platforms and increase slippage on large trades, reducing market efficiency, Yoon added. Brokerage commissions and financial revenue long dominated by traditional exchanges could also shift to global blockchain platforms.