SEC Plans Innovation Exemption for Stock Tokenization

The U.S. Securities and Exchange Commission plans to announce an innovation exemption permitting stock tokenization without listed company approval, according to Bloomberg reporting discussed by Park Sang-hyuk, editor of Digital Asset publication. An innovation exemption is an exception measure through which the SEC temporarily waives certain existing securities regulations for a defined period, allowing limited-scope testing of new financial product trading methods such as tokenized stocks. Park's analysis, shared on January 20 via SamproTV, addresses the scope and implications of this anticipated regulatory move.

Tokenization Categories and Expansion Scope

In January, the SEC categorized tokenization into four types: issuer direct issuance, issuer-delegated tokenization, third-party custody tokenization, and third-party synthetic tokenization. Park explained that the SEC previously identified issuer direct issuance and issuer-delegated tokenization as direct tokenization categories. According to Bloomberg reporting, the SEC's innovation exemption will extend to third-party custody tokenization and third-party synthetic tokenization.

This expansion means the SEC will permit both asset-backed stock tokenization—where tokens are backed by underlying securities—and price-tracking tokenization, which follows stock prices without direct asset backing.

Liquidity Fragmentation and Regulatory Considerations

Park noted concerns that uncontrolled third-party stock tokenization could fragment liquidity and create price discrepancies between platforms. If the SEC announces the innovation exemption as reported by Bloomberg, countermeasures addressing liquidity fragmentation and related issues should be incorporated into the regulatory framework.