US SEC Considers Proposal to Allow Stocks to Trade on Blockchain

• SEC moves to permit blockchain-based stock trading on regulated crypto exchanges.
• Nasdaq, Coinbase, Robinhood back tokenized stock trading as traditional finance pushes back.
• The commission approves state trust firms as crypto custodians, adding legal clarity for advisers.

The U.S. Securities and Exchange Commission (SEC) is preparing a proposal that could permit stocks to trade on blockchain-based platforms, similar to cryptocurrencies. 

According to a report by The Information, the SEC is in early discussions to permit crypto trading platforms to host “stock tokens”—digital representations of traditional equities such as Apple, Tesla, and Nvidia. If finalized, this shift would bring stocks closer to functioning like cryptocurrencies in terms of trading speed and market accessibility.

SEC weighs tokenized stock trading on crypto platforms

The SEC’s proposed rule change is an indication of a shifting approach to tokenization in which traditional financial securities can mirror ownership on blockchain networks. SEC Chair Paul Atkins recently described tokenization as an innovation that the agency should “advance, not restrict.” He emphasized that blockchain-based securities could reduce costs and improve market access, especially for retail investors.

Nasdaq has already filed a proposal with the SEC to enable the trading of tokenized equities and exchange-traded products (ETPs) under existing regulatory frameworks. The SEC’s public-comment period on Nasdaq’s proposal ends October 14. Approval would mark the first time tokenized stocks receive formal recognition from a U.S. securities exchange.

Crypto platforms, such as Coinbase and Robinhood, have also submitted requests to list tokenized equities. These platforms anticipate that tokenization will expand their offerings and attract traditional investors seeking openness in accessing the equity markets.

Pushback from Traditional Finance and Market Oversight Groups

Traditional financial institutions remain cautious, despite the interest from fintech and digital asset organizations. In a letter to the SEC, Citadel Securities, a large market-making company, cautioned that tokenization should serve clear market advantages. According to the firm, tokenized stocks must not exploit regulatory gaps but must deliver genuine operational efficiency.

The World Federation of Exchanges (WFE) also voiced concerns. In a recent communication to both the SEC and the European Securities and Markets Authority (ESMA), the WFE stated that many blockchain-based securities “mimic” traditional equities without offering corresponding shareholder rights or legal safeguards. The organization urged regulators to apply consistent oversight to these new instruments.

SEC Commissioner Hester Peirce emphasized that tokenized securities are still subject to existing laws. She stated that blockchain technology doesn’t alter the legal status of assets, and tokenized shares carry the same rights as traditional shares.

Related: SEC Freezes QMMM Stock After Sudden 2,000% Crypto Jump

Legal Framework Advances for Crypto Asset Custody

In addition, the SEC has issued a no-action letter confirming that registered investment advisers may consider state-chartered trust companies as qualified custodians under the Investment Advisers Act of 1940. 

This was in response to a formal request made by the law firm Simpson Thacher & Bartlett LLP, dated September 30, 2025. Analysts also believe this introduces legal clarity to regulated financial institutions in the crypto space.

Bloomberg Intelligence analyst James Seyffart called the development “a textbook example of more clarity for the digital asset space.” U.S. Senator Cynthia Lummis also supported the decision, noting that it aligns with earlier regulatory innovations made in Wyoming.

Tokenization Market Outlook and Industry Trends

While tokenized equities represent a smaller portion of the total market, the tokenization market continues to expand. Industry estimates suggest that only 2% of the $31 billion of tokenized assets are equity assets. However, the value of the tokenized shares has doubled in the last 100 days.

Research by Binance indicated that tokenized equities might be approaching a turning point, similar to the decentralized finance (DeFi) boom of 2020 and 2021. The study mentioned that if just 1% of the world’s stocks were tokenized, the market could reach $1.3 trillion.

Furthermore, Large firms, such as BlackRock, Franklin Templeton, and KKR, have experimented with tokenization, focusing on funds and bonds. These initial efforts suggest a broader use of blockchain technology in traditional markets.