SEC plans to develop regulatory path for round-the-clock tokenized stocks

The U.S. Securities and Exchange Commission (SEC) is laying a regulatory path for qualified platforms and is expected to achieve round-the-clock trading of tokenized U.S. stocks (24 hours a day, 7 days a week).

Core Points

The SEC is developing a limited innovation exemption mechanism for tokenized securities trading. A blockchain-based market allows eligible stock tokens to be traded at night, weekends and holidays. Because the proposed exemption has not yet taken effect, existing federal securities laws still apply. Custody, shareholder rights, market monitoring and clearing system docking remain key regulatory issues.

The U.S. Securities and Exchange Commission is working to develop an "innovation exemption" policy that will allow certain companies to temporarily test tokenized securities under limited conditions while permanent rules are being developed.

The SEC waivers or will open 24/7 trading in tokenized stocks

SEC Chairman Paul Atkins supports using exemptions to promote more financial activities online while retaining the federal securities regulatory framework. Under the proposal, the approved platform could provide digital versions of U.S. listed stocks and process transactions outside traditional exchange operating hours. Commissioner Hurst Pierce said in March that SEC staff were developing exemption clauses to promote "limited trading in certain tokenized securities" and said the measure was narrower in scope than the comprehensive exemption discussed by the Investor Advisory Committee.

No final framework, access standards or implementation dates have been announced yet, and investors cannot assume that token versions of all U.S. stocks will soon become continuously traded.

Regular U.S. stock trading hours are from 9:30 to 16:00 on weekdays, although registered exchanges and brokers can provide extended hours. Blockchain-based trading venues can continuously process transfers, allowing eligible securities to be traded at night, weekends and public holidays. The exemption would provide regulated platforms with a clear path to test the 24-hour market for tokenized stocks, according to SEC preparations, but it would be up to the committee to decide which companies are eligible, what activities they can carry out, and which existing rules remain mandatory.

For U.S. investors, continuous trading can provide opportunities to participate outside normal trading hours. The SEC still needs to determine how brokers should perform best execution, disclosure and order routing when the underlying stock market is closed and price discovery is scattered across blockchain and traditional venues.

Investor protection depends on token type

Tokens supported by issuers can represent the same security through a new ownership system, while products created by unrelated third parties may only track stock prices or provide contractual rights against the platform. In July, two transfer agents asked the SEC to distinguish between issuer backed stocks and unrelated tokens, warning that third-party structures may not provide buyers with direct ownership, voting rights, or legal dividends claims as registered shareholders.

The SEC's Investor Advisory Committee raised similar concerns in its March recommendation, opposing blanket exemptions, calling for clear ownership disclosures, supervision of intermediaries, and the design of safeguards to ensure investors receive fair enforcement conditions.

Tokenized stocks are still U.S. securities

Listing a stock will not change its status under U.S. law. Atkins pointed out in his November 2025 speech that economic essence, not token labels, determines how federal securities rules apply to assets. Tokens representing shares of listed companies are still securities. Depending on the structure, platforms participating in issuance, trading, custody or settlement may face requirements such as broker registration, exchange or alternative trading system rules, transfer agent records and clearing.

Custody issues are equally critical. The blockchain token and the underlying stock must be properly correlated. If a third party holds traditional stocks and issues independent tokens, regulators need to determine how the buyer verifies the supporting assets and how the assets can be recovered if the issuer or custodian defaults. Market surveillance requires independent controls, and the SEC needs to decide how participating venues detect manipulation, share trading information, and manage transactions that occur when major U.S. exchanges are closed. Regulators may also need to address the issue of whether blockchain settlement can operate in parallel with the Depository Trust Company's existing custody and post-transaction systems.

The proposed exemption does not change current requirements

On August 14, the SEC canceled a public meeting that was originally scheduled to review a customized issuance system for specific investment contracts involving crypto assets due to "unforeseen scheduling issues." Cancelling the meeting does not amount to a full approval vote for 24/7 trading in tokenized shares. The SEC announced that the meeting covered the registration and issuance rules for certain crypto-related investment contracts, and the exemption of tokenized securities is still an independent policy item in progress.

DTCC and Nasdaq have launched regulatory tokenization testing

Some institutions in the U.S. market have obtained limited licenses to test tokenized securities. In December 2025, SEC staff issued a no-action letter, allowing the depository trust company to operate a three-year tokenization service under specified conditions. The range of eligible assets includes Russell 1000 Index constituents, major index ETFs and U.S. Treasury bonds. The no-action letter indicates that staff members will not recommend enforcement based on the facts stated, but does not establish permanent industry rules or authorize all companies to provide similar services.

According to the August project update, DTCC has convened more than 100 members and partners to participate in the tokenization work. The participants include traditional financial institutions and blockchain companies, testing tokenization stocks, treasury bonds, collateral, securities lending and margin processes. Early production testing examined whether regulated assets could be transferred between blockchain networks while maintaining connections to existing custody and ownership records.

Nasdaq has also entered the field of regulating blockchain transactions. The SEC approved its pilot in March 2026, allowing selected participants to trade certain tokenized stocks versus traditional stocks. According to the Nasdaq structure, the tokenized version enjoys the same rights and pricing as the traditional version. The pilot covers Russell 1000 Index constituents and major index ETFs, and the products remain within the existing national market system. The New York Stock Exchange has also submitted amendments to the tokenized securities rules, submitting amendments in April to allow securities to be traded in tokenized form.

NMS regulations amend or affect chain trading venues

At the same time, the SEC is considering amending the NMS regulation, a system of rules that controls the flow of U.S. stock orders between trading venues. The proposed amendments include repealing sections 611 and 610(e), which regulate order protection and access fees. In a letter to the SEC secretary dated August 11, Ondo Finance supported the repeal proposal, arguing that existing rules favor continuous order books and may restrict the use of alternative execution systems with different trading models. Section 611 generally requires trading centers to prevent the execution of transactions at prices lower than protected quotes in other venues. Ondo said abolishing the clause would provide more room for auction-based, blockchain and other execution systems to operate in parallel with traditional order books.