In February 2026 during the ETHDenver event, SEC Chair Paul Atkins and Commissioner Hester Peirce floated the idea of a potential innovation exemption to allow tokenized stocks to be traded via DeFi automated market makers (AMMs). They described the trading of issuer sponsored tokens, with the issuer’s transfer agent taking on a key role in whitelisting stockholders. Now Bloomberg has reported that the SEC may publish its innovation exemption as soon as this week, but instead of DeFi trading being restricted to issuer sponsored tokens it might include third party tokens created without the issuer’s consent.
There are several flavors of third party tokens. A key feature is whether the tokens provide full ownership rights to the underlying stocks or are synthetic, often in the form of structured notes or derivatives. The DTC’s planned tokenized stocks are tokenized entitlements providing full ownership rights. A small broker could just as easily create tokenized versions of stocks with full ownership rights. The broker simply tokenizes the stocks it already holds in custody, passing through dividends and voting, but the token holder’s claim runs against the broker rather than through DTC, which means different counterparty risk and bankruptcy treatment. The bigger question is whether synthetic stocks are entirely out of the new SEC exemption.
Bloomberg’s description didn’t include ownership rights as the key benefit, but mentioned that the SEC is considering eligibility criteria including providing “voting rights and dividends”. It’s worth highlighting because the most popular offshore synthetic stocks are structured notes, which do not have direct ownership rights but they provide dividends in kind, and in some cases, a watered down ability to vote.
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