The U.S. Securities and Exchange Commission is preparing to release an "innovation exemption" for tokenized stocks, Bloomberg reported on May 18, 2026, citing people familiar with the matter. The move would let crypto-native platforms list digital representations of publicly traded US equities under lighter registration requirements — a structurally different path from the approvals the SEC has already granted to Nasdaq and the New York Stock Exchange.
Two rails, not one
The distinction matters. When the SEC approved Nasdaq's rule change in March 2026, it kept tokenized equities inside the existing market structure: the same rights as conventional shares, the same order books, settlement through the Depository Trust Company on T+1. A similar approval followed for NYSE in April 2026. The DTCC subsequently announced a July 2026 production pilot with more than 50 institutions, including BlackRock, JPMorgan, and Goldman Sachs.
The innovation exemption is a separate instrument. The SEC's own staff laid the legal groundwork in a January 28, 2026 statement dividing tokenized securities into two categories: those tokenized by or on behalf of the issuer, and those tokenized by unaffiliated third parties without issuer consent. For the second category, the staff wrote that the rights and benefits "may or may not be materially different from those of the underlying security" and "may or may not confer upon the holder of the crypto asset any rights as a holder of the underlying security." Under the exemption, a platform could list something that tracks Apple's share price without Apple's participation — and without giving token holders voting rights or dividends.
Chair Paul Atkins has publicly described the project. In a July 31, 2025 speech at the America First Policy Institute, he said "firms — from household names on Wall Street to unicorn tech companies in Silicon Valley — are lined up at our doors with requests to tokenize" and that the SEC would "provide relief where appropriate." On the design: periodic reports to the Commission, whitelisting or verified-pool functionality, and adherence to a compliance-aware token standard. More recently, Atkins was quoted directly: "We are on the cusp of releasing an 'innovation exemption' to begin facilitating the trading of tokenized securities onchain."
Coinbase and the exchange model question
Bloomberg's reporting names Coinbase as a likely platform candidate for the exemption. That is a significant business-model shift. A crypto exchange that can offer compliant tokenized US equity trading alongside spot crypto and derivatives would have a product surface that overlaps with brokerage. Whether that creates regulatory friction with FINRA or complicates Coinbase's existing broker-dealer licensing position is not yet resolved — the exemption's precise perimeter has not been published.
The offshore version of this product already exists at scale. Robinhood launched tokenized US equities for European customers in June 2025. Backed Finance launched xStocks on Solana the same month. By September 2025, Kraken was offering more than 60 tokenized US-listed stocks and ETFs across the EU; it acquired Backed in December. The aggregate market cap of tokenized stocks went from under $30 million at the start of 2025 to roughly $1.2 billion by year-end, according to the Forbes analysis. The exemption would bring that product category into the US domestic market.
The pushback
Traditional finance critics have consistently argued that a tokenized equity that strips voting rights and dividend entitlements is a different product from a share — and that retail investors may not understand the difference. State Street's March 2026 analysis noted that "any asset that meets the SEC definition of security, in terms of 'economic substance' and 'legal rights,' remains governed by the same laws and regulations whether recorded on-chain or off-chain." The open question is whether the lighter-touch exemption adequately handles that mapping when the token and the underlying equity are structurally distinct.
Where it fits in the deregulatory sequence
The exemption arrives alongside a wave of crypto-adjacent legislation. The House Financial Services and Agriculture Committees advanced the CLARITY Act — establishing a digital asset regulatory framework, expanding CFTC jurisdiction, and adding carve-outs for non-custodial blockchain developers — toward a House floor vote. The Senate cleared a procedural hurdle for the GENIUS Act stablecoin bill 68-30. The SEC's Crypto Task Force held a "DeFi and the American Spirit" roundtable to debate the applicability of federal securities law to decentralized systems. The innovation exemption sits at the intersection of all three threads: it is the SEC's move to establish onchain equity infrastructure before Congress defines the broader rules.
The exemption's release has not been formally announced. Bloomberg's May 18 report cited sources describing it as imminent. When published, it will be the first explicit SEC pathway for onchain equity trading outside traditional market structure — a test of whether crypto-native platforms can handle the compliance obligations that have so far kept tokenized stocks offshore.
Sources: Bloomberg, May 18, 2026; Forbes Digital Assets, May 19, 2026; SEC staff statement on tokenized securities, January 28, 2026; Paul Atkins speech, America First Policy Institute, July 31, 2025; Paul Hastings CLARITY/GENIUS Act tracker; DTCC July 2026 pilot announcement.