NEW YORK CITY, New York: The U.S. Securities and Exchange Commission is preparing a policy that could allow crypto companies to offer blockchain-based versions of publicly traded stocks, a move that analysts and lawyers say could reshape equity markets and intensify competition with traditional brokerages.

Known as tokenized stocks, the digital instruments track conventional shares but trade on blockchain networks. Supporters say the products could transform investing by enabling around-the-clock trading, faster settlement, and lower transaction costs.

Industry participants expect SEC Chair Paul Atkins to soon introduce an "innovation exemption" that would allow companies to test new digital asset business models without complying with all existing SEC disclosure and investor-protection requirements.

The exemption is expected to permit firms to offer trading in tokenized versions of U.S. stocks.

Several major crypto firms are already preparing for the shift. Coinbase has indicated it plans to launch tokenized stocks in the United States once regulations permit. Robinhood, Kraken, and other exchanges already offer similar products outside the U.S., while Coinbase announced this week that it will soon introduce tokenized stocks in overseas markets.

Although Atkins has previously described the exemption as temporary and limited, analysts say it could eventually lead to broader changes in how stock markets operate.

The proposal could allow crypto firms to compete more directly with established brokerage businesses such as E*Trade and Charles Schwab.

The market for tokenized public stocks has expanded rapidly. According to RWA.xyz, which tracks tokenized assets, the sector was worth only a few million dollars at the end of 2024. Data from CoinMarketCap now values the market at more than US$6.4 billion.

Ladan Stewart, global head of fintech and a partner at White & Case, said the innovation exemption would be a "significant win" for the crypto industry.

She said it could allow crypto companies to perform multiple stock market functions, including trade execution and clearing, without being subject to the full set of regulations governing SEC-registered exchanges, broker-dealers, and other intermediaries.

The SEC declined to comment.

The initiative is part of a broader shift in U.S. crypto policy under President Donald Trump, who pledged during his election campaign to ease regulatory pressure on the industry.

Atkins has also said the SEC is considering a separate proposal that would create a safe harbor allowing some crypto companies to raise capital without following traditional securities-offering rules.

Not everyone supports the plan. Citadel Securities and the Securities Industry and Financial Markets Association have argued that such significant changes should go through the formal rulemaking process rather than be introduced through exemptions.

Critics have also raised concerns about investor protection. While many tokenized stocks are linked to publicly traded companies, they do not always provide the same rights, disclosures, and safeguards as traditional shares.

In a social media post last month, SEC Commissioner Hester Peirce indicated that any innovation exemption would likely apply only to tokenized stocks that offer the same rights and protections as conventional equities.

Peirce declined to comment.