The U.S. Securities and Exchange Commission is reportedly introducing an “innovation exception” for blockchain-based tokenized trading of public companies, even those that do not consent to third-party token tracking of stock prices.

Bloomberg reported on Monday that the waiver could come as soon as this week, expanding trading for public companies beyond customary exchanges to decentralized crypto platforms.

The SEC reportedly spoke to “hundreds of market participants” to seek input on how to best align tokenized trading rules and proposed that third-party tokens carry the same benefits as common shares, such as voting rights and dividends, otherwise they risk being delisted.

Details have not yet been finalized and may change before the exemption is implemented, Bloomberg reported, citing people familiar with the matter. SEC Commissioner Hester Peirce has led the push for tokenized stock trading to receive an innovation exemption, sources said.

Blockchain-based tokenization has attracted increasing interest from Wall Street firms over the past few years as it is seen as offering potentially greater trading and settlement efficiencies than customary systems.

The parent company of the Recent York Stock Exchange, Intercontinental Exchange, said in January that it would launch a tokenization platform for 24/7 trading and settlement of exchange-traded stocks and funds using a blockchain post-trade system, marking one of the biggest developments in the tokenization space to date.

Source: Nate Geraci

Bullish, the cryptocurrency exchange led by former NYSE CEO Tom Farley, also strengthened its tokenization capabilities earlier this month with its $4.2 billion acquisition of transfer agent platform Equiniti.

Proponents of tokenized stock trading also say the technology can promote financial inclusion by allowing people without access to U.S. markets or customary brokerage accounts to gain exposure to public companies including Nvidia (NVDA), Google (GOOGL) and Tesla (TSLA).

Related: Kraken’s parent, Payward, is seeing revenue growth as tokenization expands

Despite the expected exemption, some SEC officials do not support the decision to allow trading in tokenized stocks, sources said.

Cointelegraph reached out to the SEC for comment but did not immediately receive a response.

The president of Securitize opposes the dismissal

Meanwhile, Brett Redfearn, CEO of one of the largest cryptocurrency tokenization platforms, Securitize, expressed concerns about the expected SEC exemption, arguing that allowing third parties to tokenize shares “without the issuer at the table” could lead to fragmentation problems.

Redfearn said this could make investors less confident in the value of their shares.

Source: Secure

Tokenized trading has also expanded into the pre-IPO space, allowing investors to gain exposure to sought-after private companies before they go public.

However, some of these companies, including OpenAI AND Anthropic, they opposed unauthorized tokenized stocks tracking their valuations.

The SEC’s tokenization decision comes after the Senate Banking Committee advanced the CLARITY Act on Thursday, setting it up for a vote in the Senate next month.

Several industry experts, including “Shark Tank” investor Kevin O’Leary, have said that Wall Street firms will not fully embrace tokenization unless a framework like the CLARITY Act is put in place and ownership issues are resolved.

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