SEC tokenized stock plan puts investor rights ahead of trading speed

The SEC has opened a five-year pathway for tokenized U.S. stocks that requires each approved token to carry the economic, voting, dividend, and liquidation rights attached to the underlying share. Summary Tokenized NMS stocks must provide the same rights as their traditional share equivalents. Synthetic products that offer only price exposure fall outside the SEC exemption. Bitget Wallet COO Alvin Kan said legal ownership matters more than 24-hour trading. The exemption carries symbol and volume limits and remains open to SEC modification. Institutions can run pilots, but the temporary order does not provide lasting legal certainty. Bitget Wallet COO Alvin Kan told crypto.news that the legal rights attached to a stock token will matter more to investors than its trading hours, settlement speed, or country of issuance. “A token that tracks a stock price is not the same thing as owning the stock. Putting both on a blockchain doesn’t erase that difference,” Kan said. Under the SEC exemption, a tokenized National Market System stock must grant its holder the same rights and privileges as the matching traditional share. Kan said those protections include an economic interest in the company, dividends, voting power and rights during liquidation. Synthetic exposure does not qualify under the exemption. An issuer can also object if an unrelated third party tries to tokenize its shares, giving listed companies some control over how their securities appear in blockchain-based markets. You might also like: Tokenized stocks face 24/7 pricing gap: RedStone COO Investor rights separate tokenized stocks from price trackers Instead of dividing the market into U.S. and offshore products, Kan said investors should examine what each token represents under the law. Two products can track the same listed company while giving their holders very different claims. One token may represent a direct or beneficial interest in shares held through a regulated structure. Another may function as a contract with an intermediary that promises to follow the stock’s price without making the buyer a shareholder. The difference can determine whether a holder receives dividends, can vote on company matters or has a claim on assets if the issuer is liquidated. Counterparty exposure may also enter the arrangement when the investor’s claim depends on a platform, custodian or special-purpose entity. A Sep. 11 examination of tokenized ownership structures found that products can represent direct shares, custodial claims or synthetic contracts. Company rules, securities laws and underwriter restrictions may still limit transfers even when a token moves freely between blockchain addresses. Kan said many crypto-native products outside the United States provide price exposure or a contractual claim against an intermediary. Under the SEC pathway, an approved NMS stock token must instead preserve the rights carried by the conventional security. Coinbase CEO Brian Armstrong made a similar distinction on Sep.