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

As the US Securities and Exchange Commission prepares to unveil an "innovation exemption" framework for tokenized stock trading, SEC Commissioner Hester Peirce indicated the scope of permissible products may be narrower than some had expected.

Peirce wrote on X on May 22 that the exemption would probably apply only in limited cases, Cointelegraph reported. In her view, only products that digitally represent the same underlying shares investors can already trade on traditional stock markets would be allowed.

That suggests synthetic tokens that track a stock’s price without holding the underlying shares would probably be excluded. Business models built around stock-linked tokens issued by third parties also stand to face regulatory scrutiny.

Bloomberg previously reported that the SEC could announce as soon as this week an innovation exemption framework allowing tokenized stock trading. The plan reportedly includes provisions that would let third parties tokenize listed shares such as Apple Inc. or Tesla Inc. without the companies’ approval.

Industry participants 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, but broader adoption of stock tokenization could spread trading in the same asset across multiple blockchain platforms.

If liquidity is split, price gaps could emerge across platforms and slippage on large trades could widen, reducing market efficiency, Yoon added. Intermediation fees and financial income now concentrated at traditional exchanges could also shift to global blockchain platforms.