SEC’s Tokenized Stock Framework Could Fracture Wall Street’s Fee Monopoly Forever

• SEC prepares an innovation exemption letting third parties tokenize stocks without issuer approval.
• Tiger Research warns that liquidity and revenue fragmentation now threaten exchange fee monopolies.
• Hyperliquid RWA open interest hit a $ 2.6B all-time high the day the SEC signalled its framework.

The SEC is preparing to announce an innovation exemption allowing third parties to tokenize listed stocks like Apple and Tesla without issuer approval. According to reports, the announcement could come within days.

The exemption, shaped by Chair Paul Atkins and Commissioner Hester Peirce following a February deregulatory proposal, is narrower than markets anticipated:

• Synthetic tokens with no voting or dividend rights are explicitly excluded
• Only on-chain instruments that fully preserve shareholder rights qualify
• Coinbase and the Blockchain Association formally submitted support letters pushing for third-party tokenization rights without issuer veto

Two Fragmentation Problems Wall Street Is Not Talking About 

The crypto industry frames tokenized stocks as an accessibility win. Tiger Research identifies two structural threats that traditional finance is quietly terrified of.

Liquidity fragmentation happens when the same Apple share trades simultaneously across Nasdaq, multiple blockchain platforms, and decentralised exchanges:

• Order flow splinters across venues
• Price discrepancies emerge between platforms
• Large institutional trades become harder to execute cleanly
• Overall market efficiency degrades

Revenue fragmentation follows directly:

• Transaction fees and management revenues that historically stayed with domestic exchanges start leaking offshore
• Jurisdictions that move slowly do not just lose market share; they lose financial leadership permanently
• Tiger Research cites CSOP’s SK Hynix leveraged ETF as a cautionary example. Korea’s regulatory hesitation allowed a Hong Kong-based manager to capture KRW 11 trillion in assets that could have accrued to domestic institutions

The SEC’s urgency in codifying this framework reflects exactly that fear. Contain fragmentation now or watch global financial revenues migrate beyond the domestic regulatory perimeter for good.

The Capital Is Already Leaving

The theoretical threat became a live data point on May 18, the same day the SEC signalled its forthcoming framework.

Hyperliquid’s RWA open interest hit an all-time high of $2.6 billion that day, doubling in just two months. Institutional and retail demand for 24/7 on-chain access to real-world assets is already reshaping capital flows regardless of what regulators decide.

Traditional exchanges now face a binary choice according to Tiger Research:

• Build tokenized stock infrastructure through partnerships, as the NYSE has begun exploring
• Lobby to block adoption and protect existing revenues

The second option delays the problem. It does not solve it.

Two Battles Still Coming

Even after the framework is formally announced, the conflicts are only beginning.

The shareholder rights dispute. Tiger Research describes this as a second CLARITY battle. Just as the stablecoin yield debate pitted crypto platforms against traditional banks, tokenized stocks will trigger a sharp legal fight over what on-chain equity means for voting rights, dividends, and corporate governance.

The unlicensed exchange problem. Platforms like Hyperliquid absorbed significant RWA volume while operating outside the regulatory perimeter. The moment regulators formally classify them as unlicensed exchanges, a new wave of market uncertainty follows, and liquidity gets disrupted again.

Related: Russia Finalizes Crypto Bill as Digital Assets Gain Legal Status