SEC Plans Regulatory Path for 24/7 Tokenized Stocks

The U.S. Securities and Exchange Commission is working on a regulatory framework that could allow approved platforms to experiment with around-the-clock trading of tokenized U.S. stocks, potentially extending equity markets beyond the traditional trading day.

The initiative centers on a proposed “innovation exemption” that would give selected firms temporary regulatory relief to test tokenized securities under specific conditions while the SEC works toward longer-term rules.

The effort reflects a broader shift at the agency toward exploring how blockchain technology could be integrated into established financial markets without removing digital versions of securities from the existing regulatory framework.

SEC Chair Paul Atkins has backed the use of the commission’s exemptive authority to facilitate blockchain-based financial activity. Commissioner Hester Peirce said in March that SEC staff was developing an exemption intended to enable limited trading of certain tokenized securities.

The proposal, however, remains under development. The SEC has not yet published final eligibility requirements, operating conditions or an implementation date. Any eventual exemption would therefore be narrower than a blanket authorization for all tokenized stocks to trade continuously.

Blockchain could extend equity trading beyond market hours

U.S. equities are traditionally traded on registered exchanges between 9:30 a.m. and 4 p.m. Eastern time on business days, with some brokers and venues offering additional pre-market and after-hours sessions.

Blockchain-based markets could operate differently.

Because transactions on a blockchain can be processed continuously, a regulated tokenized securities venue could potentially allow eligible shares to change hands overnight, on weekends and during public holidays.

For investors, that could create a fundamentally different trading environment. Market participants would no longer have to wait for the next conventional session to buy or sell an eligible tokenized security.

But continuous trading also raises difficult questions about how traditional market protections would work when the underlying stock market is closed.

Regulators would need to address issues including best execution, pricing, disclosures, order routing and liquidity. A tokenized stock could continue trading while its conventional counterpart remains unavailable, potentially creating differences between prices discovered on blockchain-based venues and those established in the traditional market.

The structure of the token itself would also matter.

A token issued by or on behalf of a company could represent an actual security and its associated ownership rights. Another token, issued by an unrelated intermediary, could instead provide exposure to a stock's price without giving the holder direct ownership of the underlying shares.

That distinction has become a central issue in the SEC's examination of tokenized equities.

In July, two groups representing transfer agents urged the commission to distinguish issuer-backed tokenized securities from products created by third parties. They argued that investors in some third-party structures may not receive the same ownership, voting or dividend rights associated with registered shareholders.

The SEC's Investor Advisory Committee raised related concerns in March, opposing a broad exemption and calling for greater transparency around ownership, intermediary oversight and execution standards.

Tokenization does not remove securities laws

Moving a stock onto a blockchain does not, by itself, change its legal status.

Atkins said in a November 2025 speech that the application of federal securities laws should be determined by an asset's economic substance rather than by the terminology used to describe it.

That means a token representing shares in a public company would remain subject to U.S. securities regulation.

Depending on how a tokenized market is structured, companies involved in issuance, trading, custody or settlement could therefore encounter rules governing broker-dealers, exchanges, alternative trading systems, transfer agents and clearing agencies.

Custody is particularly important.

If conventional shares are held by a custodian while digital tokens representing those shares circulate on a blockchain, investors and regulators need a reliable way to establish that the tokens are properly backed. They would also need safeguards covering what happens if an issuer, custodian or intermediary becomes insolvent.

Market surveillance presents another challenge.

A 24/7 blockchain market would need mechanisms to identify manipulation and suspicious activity, share information with regulators and coordinate with conventional trading venues. Regulators must also consider how transactions executed while U.S. exchanges are closed would interact with existing clearing and settlement infrastructure.

The SEC's proposed exemption has not yet changed any of those obligations.

The distinction is important because the commission has recently postponed other crypto-related regulatory proceedings. On Aug. 14, the SEC canceled a scheduled open meeting that was expected to address a tailored offering regime for certain crypto-related investment contracts. The agency cited an unforeseen scheduling issue.

That cancellation was not a decision on 24/7 tokenized stock trading. The proposed tokenized-securities exemption remains a separate regulatory initiative.

DTCC and Nasdaq are already testing tokenized securities

While the SEC develops its broader approach, established market infrastructure providers have already begun testing blockchain-based versions of traditional securities.

In December 2025, SEC staff issued a three-year no-action letter covering a defined tokenization service operated by the Depository Trust Company, DTCC's depository subsidiary.

The initiative covers a range of assets, including Russell 1000 stocks, major index ETFs and U.S. Treasury securities.

A no-action letter does not create a permanent regulatory framework or provide universal approval. Instead, it indicates that SEC staff does not currently intend to recommend enforcement based on the specific facts and conditions presented.

DTCC has since expanded its tokenization efforts. An August project update said more than 100 members and partners were participating in the initiative, bringing together traditional financial institutions and blockchain companies.

The projects span tokenized equities, Treasuries, collateral, securities lending and margin-related processes.

The underlying goal is not simply to put securities on a blockchain. It is to determine whether blockchain-based representations can operate alongside established systems for custody, ownership and settlement.

That infrastructure remains significant. DTC provides custody and asset-servicing functions for more than $114 trillion in securities, although that figure reflects its overall business and does not represent assets currently designated for tokenization.

Nasdaq has also begun testing blockchain-based equity markets.

In March 2026, the SEC approved a Nasdaq pilot allowing selected participants to trade certain tokenized equities alongside their conventional counterparts.

The structure is designed to keep the tokenized securities within the existing national market system. Eligible Russell 1000 securities and major index-linked ETFs can be represented in tokenized form while retaining the same economic rights and pricing relationship as their traditional versions.

NYSE has pursued a similar route. SEC filings show that the exchange submitted proposed rule changes in April that would enable securities to trade in tokenized form.

Together, the initiatives suggest that U.S. regulators and market infrastructure providers are increasingly exploring tokenization as an extension of existing financial markets rather than as a parallel system operating outside them.

Regulation NMS could shape the next phase

Another regulatory development could prove important for blockchain-based trading venues: the SEC's review of Regulation NMS.

The commission is considering changes to the rules governing how equity orders interact across U.S. trading venues. Among the proposed changes are the rescission of Rule 611 and Rule 610(e), which address order protection and access fees within the national market system.

Ondo Finance supported the proposed changes in an Aug. 11 letter to SEC Secretary Vanessa Countryman.

The company argued that parts of the existing framework are built around conventional continuous order books and could make it harder for alternative execution models to compete.

Rule 611, for example, generally requires trading centers to prevent executions at prices inferior to protected quotations displayed elsewhere. Ondo argued that removing the provision could give alternative models, including blockchain-based and auction-style systems, more flexibility to develop.

The company also asked the SEC to revise elements of its economic analysis before the proposed amendments are finalized.

The debate illustrates a larger question facing U.S. regulators: whether rules designed around traditional exchanges can accommodate markets that operate continuously, settle on blockchain networks and use different mechanisms for matching buyers and sellers.

A potential turning point for tokenized markets

The SEC's proposed innovation exemption does not yet create a 24/7 stock market.

What it does signal is a willingness to test whether blockchain-based securities markets can operate within the boundaries of U.S. financial regulation.

The eventual framework will have to balance experimentation with investor protection, particularly around ownership rights, custody, liquidity, market surveillance and the connection between blockchain networks and traditional clearing systems.

If the SEC ultimately provides a workable path for regulated platforms to operate continuously, tokenized equities could become more than a digital representation of conventional stocks. They could become part of a market structure capable of operating around the clock.

For now, however, the U.S. remains in the testing phase. The technology is moving quickly, but the regulatory infrastructure needed to support a truly 24/7 tokenized stock market is still being built.