The term 'tokenized shares' is no longer a novelty. Tokens linked to stock prices and on-chain products backed by actual shares have already emerged.
On September 17, 2026, the U.S. Securities and Exchange Commission (SEC) announced a conditional exemption known as the 'Innovation Exemption.' This applies to markets where shares traded on major U.S. exchanges are tokenized and traded on-chain using AMMs and liquidity pools. The exemption is valid for five years from its announcement, during which the SEC will use real-world operations and feedback from market participants to inform future regulatory considerations.
The focus this time is not on products that merely replicate stock prices. The SEC requires that these tokenized securities possess the same rights as traditional shares of the same class, including rights to dividends and voting.
The concept of 'tokenizing shares' has been discussed before. What sets this initiative apart is that it includes tokenized securities with shareholder rights in the regulatory framework, allowing them to be traded using AMMs, a mechanism commonly used in cryptocurrency DEXs.
Robinhood Europe's Classic Stock Tokens are not products that hold the underlying shares themselves. They are derivative contracts with Robinhood Europe that track the price of the underlying shares. According to Robinhood's explanation, buyers do not own the underlying shares and do not possess certain shareholder rights such as voting rights.
xStocks traded on platforms like Kraken have a different structure. They are backed 1:1 by the underlying shares and issued on networks such as Solana and Ethereum. They can be transferred to corresponding wallets and used as collateral or for liquidity provision in DeFi. However, they do not grant the same voting rights or legal claims to the underlying shares as regular shareholders. The economic benefits of dividends are reflected through a mechanism that adjusts the holding quantity.
The Tokenized NMS Stock targeted by the SEC this time differs from both of these. Here, NMS Stock refers to shares subject to the U.S. National Market System. It can also apply to shares tokenized by third parties, but they must possess equivalent rights to the original shares. Products issued by third parties that merely replicate the price movements of the underlying shares are excluded.
This is not a system for transferring existing stock certificates directly to a permissioned AMM. The terms "tokens linked to stock prices" and "tokenized securities with shareholder rights" refer to different structures, even if both are called tokenized shares.
