SEC Clears Tokenized Stocks: Can 24/7 trading reshape US markets?

The US stock market has taken an important step towards trading on blockchain-based infrastructure. On September 17, 2026, the US Securities and Exchange Commission granted temporary and conditional relief that allows qualifying venues to facilitate onchain trading in genuine tokenized versions of listed US stocks. The decision could support round-the-clock trading, fractional ownership and faster settlement, but it is not a permanent or unrestricted approval for every US stock to trade 24/7.

Let's break down what the SEC has actually permitted, how tokenized stocks work and why the decision could change market infrastructure without immediately replacing the New York Stock Exchange or Nasdaq. We will also examine the companies that may benefit, the risks investors should understand and what the development means for global and Indian markets.

What’s covered in this article?

• What the SEC's Innovation Exemption permits
• How a genuine tokenized stock differs from a synthetic stock token
• Why 24/7 access does not guarantee 24/7 liquidity
• Which financial companies could benefit and how their valuations compare
• How the US framework differs from developments in Europe, the UK and India
• What Indian investors should verify before using any tokenized-stock platform

What did the SEC approve for tokenized stock trading?

The SEC's order creates what it calls an Innovation Exemption. The relief is temporary and is scheduled to expire five years after the order is published. It conditionally exempts a Tokenized Securities Venue, or TSV, from the definition of an exchange under the Securities Exchange Act of 1934 when the venue operates within the order's boundaries.

The SEC also granted conditional relief from the Act's dealer definition to certain liquidity providers that use their own capital to supply tokenized shares to eligible liquidity pools. These firms may also perform activities that could otherwise raise dealer-registration questions, such as quoting prices to customers or committing capital under an agreement.

This is not a blanket exemption from US securities law. Anti-fraud and anti-manipulation provisions continue to apply in full. A venue must satisfy requirements covering participant verification, public disclosure, shareholder rights, transaction reporting, trading halts, recordkeeping, technology safeguards and conflicts of interest.

The exemption is available immediately, but a venue cannot begin operating without notice. A qualifying TSV must be a US person and must publish detailed information on its website at least 30 calendar days before launch. It must notify the SEC within one business day after publishing that notice. This is a notice-based exemption rather than an individual SEC approval of every venue.

What is a tokenized stock and is it the same as a real share?

A tokenized stock is a digital representation of a security that is recorded and transferred through distributed ledger technology. The blockchain changes the infrastructure used to trade and record the asset. It should not change the investor's underlying economic claim.

Under the SEC framework, an eligible tokenized stock must provide the same rights and privileges as the equivalent conventional share. These include the same interest in the company, the same right to receive dividends declared for that class, the same voting rights and the same claim on residual assets in a liquidation. The structure must also make proxy material and other issuer communications available to token holders without passing the cost to the company or its shareholders.

This requirement separates an eligible tokenized NMS stock from many synthetic stock tokens offered outside the US. A synthetic token may only track the price of a company through a derivative or a contractual promise from its issuer. The investor may receive economic exposure without becoming a shareholder or receiving voting rights. Synthetic tokens, token-linked securities and tokenized security-based swaps are not covered by this exemption.

The practical question for an investor is not whether a token carries a familiar stock symbol. The important question is whether the token represents the security itself or only a promise linked to its market price.

How could 24/7 tokenized stock trading work?

Traditional US stock exchanges primarily use order books. Buyers submit bids, sellers submit offers and a matching engine connects compatible orders. A TSV can instead use an automated market maker, commonly called an AMM. Investors trade against a pool of assets while a smart contract calculates prices using programmed rules and the quantities available in that pool.

The difference is similar to comparing a marketplace with a currency counter. An exchange order book needs another participant to quote or accept the other side of a trade. An AMM uses a pre-funded pool that transacts according to its formula. Liquidity providers deposit tokenized stocks and paired assets into the pool and may earn fees when investors trade against it.

Because smart contracts and public blockchains can operate continuously, the SEC says the structure could support around-the-clock trading, fractional ownership, investor self-custody and near-instant settlement. However, these are potential benefits of the model. The order does not guarantee that every venue will provide all four features or that every transaction will settle instantly.

The SEC has also imposed transparency requirements. A TSV must make US-dollar-denominated transaction information freely available in a machine-readable format for the preceding 30 days. The data must be updated within 10 minutes of a transaction and must include price, size, time, direction, the relevant symbols and the smart-contract address. Daily trading volume and the end-of-day size of each liquidity pool must also be disclosed.

Why 24/7 access does not mean 24/7 liquidity?

Continuous access does not guarantee deep liquidity at every hour. When the primary exchange is closed, fewer professional market makers may be active and the conventional share price is not continuously updating. A small overnight order could therefore move an AMM price more sharply than an equivalent order during the main US trading session.

Arbitrage may narrow the gap when both markets are open, but price differences can persist when the traditional market is closed or when moving assets between venues takes time. Round-the-clock trading removes the closing bell. It does not remove spreads, slippage or price-discovery risk.

Why is the SEC exemption a controlled experiment?

The clearest evidence comes from the SEC's symbol and volume limits. Each TSV must combine its activity with that of its affiliated TSVs when testing these limits. The rule therefore prevents a business from creating several affiliated venues simply to multiply its permitted capacity.

Tier 1 follows the SEC's established Limit Up-Limit Down classification. It includes stocks in the S&P 500, stocks in the Russell 1000 and certain exchange-traded products with more than $2 million in consolidated average daily notional volume. Tier 2 includes other eligible NMS stocks but excludes rights and warrants.

Consider a Tier 1 stock that traded an average of 100 million shares a day in the previous month. The relevant TSV and its affiliates could average no more than 250,000 shares a day in that tokenized stock because 0.25% of 100 million is 250,000. A Tier 2 stock with average daily volume of 2 million shares would have a corresponding limit of 50,000 shares because 2.5% of 2 million is 50,000.

The SEC allows a limited first breach of a volume threshold without an immediate suspension. If the same stock exceeds the applicable threshold again, the TSV and its affiliates must pause trading in that tokenized stock for three months. These limits are large enough to generate useful market data but small enough to restrict the experiment's effect on the wider US market.

The order also preserves several links with conventional market safeguards. A TSV must halt a tokenized stock whenever trading in the underlying share is halted or suspended on its primary exchange. The venue cannot conduct an initial public offering or another primary issuance under this exemption. It can only facilitate secondary trading in eligible tokenized NMS stocks.

How could tokenized stocks change US market infrastructure?

The long-term opportunity extends beyond longer trading hours. The current US market separates execution, clearing, settlement, custody and shareholder recordkeeping across several institutions and systems. Tokenization could connect more of those functions through programmable infrastructure.

First, blockchain-based settlement could reduce the time between the exchange of cash and securities. Conventional US stocks settle on T+1, which means the legal exchange of cash and shares is generally completed one business day after the trade. A properly designed onchain transaction could bring the two legs closer together and reduce the collateral required to manage counterparty exposure during the settlement period.

Second, smart contracts can automate parts of compliance and asset servicing. Transfer restrictions, investor eligibility and some corporate-action instructions can be built into code. Automation may reduce reconciliation work, but it can also spread a software error quickly. The SEC therefore requires TSV smart contracts to be auditable, publicly available and deployed on a public permissionless distributed ledger.

Third, the exemption creates a new source of competition. Crypto platforms can move towards regulated securities while exchanges, brokers, clearing houses, custodians, transfer agents and stablecoin issuers can compete for different parts of the transaction chain. The likely result is not the immediate replacement of traditional finance. It is a gradual convergence between existing securities markets and blockchain-based infrastructure.

Which US companies could benefit?

The September 17 announcement supported shares of several businesses associated with retail trading, crypto infrastructure and tokenization. However, the broader market also rallied that day, with the S&P 500 and Nasdaq advancing. The company-level gains shown below should therefore be treated as the full-session market reaction rather than as returns caused exclusively by the SEC order.

The table uses market data for the US session ending September 17, 2026. Securitize closed at $9.49 after rising 22%. Figures are rounded and valuation multiples change with share prices and earnings.

Robinhood has the clearest retail-distribution angle. For the quarter ended June 30, 2026, the company reported net revenue of $1.31 billion, up 32% from a year earlier. It had 28.4 million funded customers and $369 billion in total platform assets. Robinhood also said its stock tokens were available to eligible users in more than 120 countries through the Robinhood Wallet.

Those figures show that Robinhood already has customers, assets and a product base from which it can develop tokenized investing. They do not prove that the SEC exemption will produce material US revenue in the near term. At roughly 49 times trailing earnings, the share price already reflected strong growth expectations across Robinhood's wider business. Tokenization would eventually need to increase funded customers, assets, trading activity or fee income to justify a meaningful addition to valuation.

Coinbase could benefit if tokenized stocks drive activity across wallets, custody services, stablecoins and onchain trading. Its negative trailing earnings multiple means a conventional P/E comparison was not meaningful at the stated date. Investors would need to focus instead on revenue quality, cash generation, regulatory costs and profitability across market cycles.

Nasdaq and Intercontinental Exchange represent the incumbent side of the opportunity. In March 2026, the SEC approved Nasdaq's rule change allowing eligible securities to trade in tokenized form through its existing market and settle under a Depository Trust Company pilot once the necessary post-trade infrastructure is available. That model uses Nasdaq's existing order book and differs from the AMM-based TSV framework created in September.

The presence of both routes suggests that established exchanges may adapt rather than simply lose trading activity. Robinhood and specialist tokenization companies may offer greater sensitivity to adoption, but they also carry more execution and valuation risk. Nasdaq and ICE have more diversified businesses, although tokenization is less likely to transform their earnings in the immediate future.

How does the US approach compare globally?

The US is joining a wider regulatory transition. The European Union's DLT Pilot Regime has applied since March 23, 2023. It permits authorised market infrastructures to trade and settle financial instruments recorded through distributed ledger technology while operating under defined exemptions and limits.

The EU pilot covers shares with a market capitalisation or tentative market capitalisation below €500 million. It also covers eligible debt securities with an issuance size below €1 billion and UCITS funds with assets below €500 million. An exception to the €1 billion debt threshold applies to certain corporate bonds issued by companies whose market capitalisation did not exceed €200 million at issuance.

The UK's Digital Securities Sandbox allows participants to test the live issuance, trading and settlement of instruments including equities, government and corporate bonds, money-market instruments and fund units. The sandbox is expected to operate until December 2028, while the application window is expected to close around March 2027 so firms and regulators have time to prepare for a possible permanent framework.

The US approach is distinctive because it can cover tokenized forms of existing National Market System stocks, including shares of large companies, through permissioned trading on public permissionless blockchains. Yet the 75-symbol Tier 1 limit and the 0.25% volume cap show that the SEC is seeking real trading data without allowing the new venues to become systemically important immediately.

What does the decision mean for India?

India is testing tokenization through a different part of the securities market. On September 10, 2026, SEBI announced the successful launch of Demat 2.0, a pilot for tokenized corporate bonds. The securities are issued and held on a private permissioned ledger owned by the depositories. The payment leg uses the RBI's wholesale central bank digital currency through the Unified Market Interface to enable atomic settlement, where the bond and payment move together.

SEBI reported that three issuers had raised a combined ₹1,025 crore through the pilot by September 10. REC raised ₹500 crore from 18 investors on September 7. Larsen & Toubro raised ₹500 crore from four investors on September 9 while IIFL raised ₹25 crore from one investor on the same day.

The first phase focuses on institutional issuance and servicing. SEBI's planned later phases would enable secondary-market transactions through existing request-for-quote platforms and extend participation to retail investors. The regulator has not announced a comparable framework for 24/7 tokenized equity trading in India.

For Indian investors, the SEC order does not automatically create access to tokenized US stocks. Access will depend on whether a qualifying venue accepts Indian residents and whether the product, remittance route, custody structure and reporting treatment comply with Indian rules. Investment in conventional foreign securities has an established framework under the Liberalised Remittance Scheme. The treatment of a tokenized product requires closer examination because a genuine foreign security and a synthetic crypto-linked claim are legally and economically different.

Resident and ordinarily resident taxpayers must disclose applicable foreign accounts, foreign assets and foreign-source income in the relevant income-tax schedules. Holding an investment through a blockchain wallet does not automatically remove tax or foreign-asset reporting obligations. Before using a tokenized-stock platform, an Indian investor should verify the legal owner, shareholder rights, custodian, remittance purpose, tax reporting process and available recourse.

What are the main risks for investors?

Tokenization can reduce some market frictions while introducing new ones. Investors should evaluate the entire ownership and trading chain rather than focusing only on the promise of continuous access.

Continuous markets may also encourage unnecessary activity. The ability to trade a company at any hour does not improve its earnings, cash flows or balance sheet. For a long-term investor, convenience should remain secondary to business quality, valuation and portfolio suitability.

How should investors assess the opportunity?

A useful framework has three parts: access, monetization and durability.

Access: Does the company control customer distribution, regulatory permissions, custody, wallets, settlement infrastructure or issuer relationships? Technology without eligible users or reliable liquidity may not generate meaningful activity.

Monetization: Can the company earn transaction fees, custody revenue, stablecoin income, interest income or market-data revenue? Investors should look for disclosed users, assets, volumes and revenue rather than relying only on product announcements.

Durability: Will the model remain attractive after compliance costs, liquidity incentives, cybersecurity spending and competition? The volume caps mean that the early data may be valuable even if the initial revenue opportunity is modest.

The most useful indicators will be the number of operational TSVs, the companies that permit tokenization, liquidity-pool depth, trading volume outside regular hours, spreads versus conventional shares, settlement failures, security incidents and revenue disclosed by participating firms. These measures will show whether tokenization is improving market infrastructure or merely moving speculative activity to a new venue.

The bottom line

The SEC's Innovation Exemption is a genuine regulatory breakthrough because it creates a legal route for limited trading in real tokenized US stocks through permissioned blockchain-based venues. It could support 24/7 access and faster settlement while preserving shareholder rights and core securities-law protections.

However, the five-year term, issuer objection process, symbol limits, volume caps and participation requirements make it a controlled experiment rather than an overnight redesign of the US equity market. The immediate commercial opportunity is likely to be smaller than the headline suggests.

The long-term opportunity is more substantial. Tokenization could connect trading, settlement, ownership records and corporate actions through programmable infrastructure. Platforms must still attract users, secure issuer acceptance, build deep liquidity, protect assets and convert activity into profitable revenue. For Indian investors, the development is strategically important but it does not yet replace the established route for owning US shares or remove FEMA, tax and foreign-asset reporting responsibilities.