SEC Commissioner cools hype around “innovation exemption” for stocks

U.S. Securities and Exchange Commission Commissioner Hester Peirce has pushed back against expectations that the agency could soon open the door to unrestricted tokenized stock trading through a proposed “innovation exemption.”

According to comments Peirce posted on X on Thursday, any exemption under consideration would apply only to on-chain versions of existing equity securities that already trade in public secondary markets.

She said she has always expected the proposal to remain “limited in scope,” adding that it would facilitate trading only for “digital representations of the same underlying equity security that an investor could purchase in the secondary market today.”

Her clarification arrived days after Bloomberg reported that the SEC was exploring a conditional exemption framework that could allow certain tokenized securities products to operate with modified regulatory requirements.

Fox Business journalist Eleanor Terrett described Peirce as “tempering expectations” around the proposal and narrowing its focus to “onchain equity products, not synthetic tokens that mimic stocks without giving investors the same shareholder rights.”

Peirce’s comments also appear to rule out synthetic stock-style tokens under the contemplated exemption. Such products typically track the price of equities without granting holders ownership rights tied to the underlying shares.

SEC discussions focus on shareholder rights

As previously reported crypto.news, SEC officials have discussed permitting tokenized equities only if the tokens preserve the same economic and governance rights attached to traditional shares, including voting rights and dividend access.

People familiar with the matter said the agency has gathered feedback from hundreds of market participants while shaping the proposal. The report added that discussions remain ongoing and the final terms could still change before any exemption is approved.

Concerns over synthetic stock products surfaced soon after the news surfaced. Brett Redfearn, president of tokenization firm Securitize, warned that allowing third parties to tokenize stocks without issuer involvement could create fragmentation problems across the market.

Other industry figures have also backed Peirce’s narrower interpretation.

Robert Leshner, CEO of tokenization platform Superstate, said on X that limiting tokenized trading to properly structured on-chain equities would allow decentralized finance and tokenization markets to grow “without compromising the standards that make the USA the center of capital markets.”

Meanwhile, Carlos Domingo, CEO of Securitize, has argued that restricting the exemption to genuine equity-linked assets would reduce risks tied to synthetic products.

“This is good, we want to do on-chain trading, but for the right assets, and not to help proliferate those derivatives that are fragmenting the market and introducing additional risks,” Domingo said.

Even with rising interest from crypto firms and financial institutions, tokenized equities remain a relatively small corner of the digital asset sector, though it is expected to grow. 

Data from RWA.xyz shows that tokenized stocks currently account for roughly $1.48 billion in on-chain assets. Existing offerings include tokenized exposure tied to companies such as Circle, Strategy, and Google.

Total RWA market value. Source: RWA.xyz

Previously, it was also reported that some SEC officials remain hesitant about allowing tokenized stock trading at all, despite ongoing discussions around a possible exemption.