Bloomberg reports regulators are set to unveil guidelines for securities represented on blockchain technology.

In a significant development, the US Securities and Exchange Commission (SEC) is poised to unveil a groundbreaking framework that could revolutionize the trading of tokenized stocks, potentially giving Wall Street firms the green light to migrate traditional securities to blockchain technology. This innovation exemption, as reported by Bloomberg Law on Monday, could be introduced as early as this week, paving the way for a more streamlined regulatory environment for digital trading platforms.

By introducing this exemption, the SEC would be sending a clear signal that US regulators are embracing tokenized securities, an area where cryptocurrency companies and major financial institutions are increasingly converging. Tokenized stocks, which are blockchain-based equivalents of traditional equities, offer the advantage of round-the-clock trading and faster settlement times. Proponents argue that this structure could minimize settlement delays and increase global market accessibility, although detractors have raised concerns about liquidity fragmentation and investor protection.

Major Wall Street firms are already positioning themselves for this potential shift. The Depository Trust & Clearing Corporation (DTCC), which plays a crucial role in processing and safeguarding the US securities market, has announced plans to launch limited production trades of tokenized assets in July, with a broader rollout scheduled for October. This system would enable the creation of tokenized versions of stocks and ETFs, backed by assets already held within DTCC's existing infrastructure.

Meanwhile, Nasdaq is developing a framework for companies to issue blockchain-based shares, while preserving traditional ownership rights. The SEC gave its approval for this plan in March. Intercontinental Exchange (ICE), the parent company of the New York Stock Exchange, has also revealed plans to expand into tokenized stocks and crypto-linked products through a partnership with crypto exchange OKX.

These combined efforts indicate a race to modernize the $126 trillion global equity market using blockchain technology. SEC Chair Paul Atkins has expressed support for this direction, stating that the agency is considering formal rulemaking for on-chain trading systems, blockchain settlement infrastructure, and crypto custody models. Atkins emphasized that existing securities rules are not suited to blockchain-based systems, which integrate exchange, clearing, and settlement functions into a single protocol, and argued that the SEC should provide clarity through regulation rather than enforcement actions.