Slamming the brakes at the last minute! SEC urgently halts "tokenized US stocks" plan
The US Securities and Exchange Commission (SEC) has shelved a regulatory exemption plan for “tokenized stocks” at the last minute, reigniting the rivalry between the crypto industry and traditional financial markets.
According to Bloomberg, the SEC originally planned to officially release the so-called “innovation exemption” framework as early as this week, which would allow a “third-party” token to trade around the clock on decentralized crypto platforms. This type of token is essentially a synthetic instrument that tracks stock prices and can circulate without the authorization of the listed company, though it may lack voting or dividend rights. The aim of the plan is to allow investors to trade US stocks via digital tokens.
However, after intensive lobbying by industry groups behind traditional exchanges such as Nasdaq, Cboe, and CME Group, the SEC decided to postpone the release schedule to further assess feedback from various parties. Notably, there are internal disagreements within the SEC as well.
This suspension has a significant impact on the market. Parties that had bet on regulatory benefits for the crypto market—including crypto exchanges and traditional financial institutions—will now have to slow down their plans. The final direction of the framework remains highly uncertain.
Third-Party Tokenized Securities: Central Controversy and Regulatory Boundaries
The core controversy of the “innovation exemption” lies in how to handle “third-party tokenized securities.”
The SEC divides tokenized securities into two types: those led by issuers, and those led by third parties unrelated to the issuers. The focus of this exemption is the latter—any third party may issue digital tokens tracking the share price of listed companies (like Apple, Nvidia, Tesla) without their consent and freely circulate them on decentralized finance (DeFi) platforms.
These tokens are essentially synthetic tools that track share prices and may not have traditional shareholder rights, such as voting or dividends. Reports indicate the SEC is considering requiring trading platforms to provide these rights, or they might face delisting risks.
From a policy perspective, the framework is part of “Project Crypto” led by SEC Chair Paul Atkins, aiming to align with the Trump administration’s pro-crypto regulatory stance and end prior “enforcement-led regulation.” The main driving force behind the exemption is Commissioner Hester Peirce—a longtime ally of Atkins. However, both have recently sought to lower market expectations, describing any potential exemption as “limited in scope and gradual.”
Traditional Exchanges Intensify Pressure, Delay Release Schedule
The immediate trigger for the SEC's halt came from intensive lobbying by traditional financial institutions.
Bloomberg reports the SEC staff recently met multiple times with exchange officials and other market participants, and after reviewing their feedback, decided to postpone the exemption framework. The World Federation of Exchanges—whose members include Nasdaq, Cboe, and CME Group—sent a stern letter to the SEC in November 2025.
The organization believes such exemptions could “dilute” existing investor protections and give crypto exchanges regulatory shortcuts unavailable in traditional markets, “distorting” market competition. The federation stated granting legitimacy to tokenized stocks before full compliance would “unquestionably have negative, even severe, consequences for the US market.”
It’s worth noting that the traditional financial camp doesn’t entirely reject tokenized securities. Nasdaq received SEC approval in March 2026 to advance its own tokenized securities program, but its model is very different from the “innovation exemption”: Nasdaq requires all trading to be conducted within the exchange, preserves full shareholder rights, and uses DTCC’s enterprise-level blockchain infrastructure.
Concerns Over Market Fragmentation: Warnings From SEC and Industry
Opposition does not come solely from traditional exchanges; heavyweight institutions in both the SEC and the industry have also voiced warnings.
Securitize President and former SEC Director of Trading and Markets Brett Redfearn pointed out that if a third party can tokenize Apple or Amazon without issuer involvement, theoretically, the same company could be tokenized into countless different versions. “This could create a whole new level of market fragmentation, making it impossible for investors to know how much their stocks are really worth at any given moment.”
The Securities Industry and Financial Markets Association (SIFMA) warned last December that the tokenized market may lack basic standards such as connectivity and price transparency, posing risks of “fragmentation and disorder.” Citadel also stated in its opinion that month that any exemption should not override core market safeguards such as know-your-customer (KYC), anti-money laundering (AML), and others.
The “innovation exemption” would establish a parallel crypto-native market outside the existing system, allowing dozens of third-party token issuers to track the same stock simultaneously, potentially dividing market liquidity—exactly the systemic risk highlighted in these warnings.
Capital and Legislation Advance Side by Side, Exemption Outlook Uncertain
Despite delays in the exemption framework, the market layout around tokenized stocks continues apace.
Bullish, a crypto exchange led by former NYSE President Tom Farley, acquired transfer agent Equiniti for $4.2 billion this month. Equiniti handles stock ownership records and assists with dividend payments, making it a vital part of market infrastructure. Meanwhile, the NYSE is using blockchain technology to build a new platform for trading tokenized stocks and ETFs.
On the legislative front, the US Senate Banking Committee last week advanced the digital asset market structure bill—the Clarity Act. The act aims to establish the Commodity Futures Trading Commission (CFTC) as the primary regulator for most crypto activities, while preserving SEC oversight for digital securities.
An SEC spokesperson said the agency has met with hundreds of market participants and solicited broad feedback, and the final framework may be revised before release. This means the ultimate form of the “innovation exemption”—and whether it will be implemented—remains highly uncertain.
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