The SEC is drawing a very specific line in the sand on tokenized securities. Commissioner Hester Peirce clarified on May 22 that the agency’s much-anticipated “innovation exemption” will apply narrowly to genuine onchain equity products, meaning digital representations of actual shares that come with full shareholder rights.
Synthetic tokens that merely track stock prices without conferring voting power or dividend eligibility are excluded.
What the exemption actually covers
Genuine onchain equity products would let holders vote at shareholder meetings, collect dividends, and exercise the same rights as someone holding traditional shares through a brokerage. Synthetic tokens, by contrast, are more like derivative contracts that mirror price movements without any underlying ownership claim.
Peirce’s comments build on remarks from SEC Chair Paul Atkins, who described the exemption during an address at ETHDenver in February 2026 as a modest and carefully controlled initiative. Atkins outlined operational restrictions including volume caps and participant allowlisting.
