SEC Delays ‘Innovation Exemption’ Proposal for Tokenized Stocks: Report

US Securities and Exchange Commission has reportedly delayed the release of a proposal permitting tokenized stock trading after concerns were raised by industry participants.

US Securities and Exchange Commission has reportedly postponed its plan to permit trading of tokenized stocks after concerns were raised by stock exchange officials over how the proposal would be implemented.

Bloomberg reported on Friday, citing sources familiar with the matter, that the SEC’s “innovation exemption” for crypto-based stocks had been expected to be released during the week, with a draft of the tokenized stock trading proposal already reviewed by SEC staffers.

US Securities and Exchange Commission has reportedly received feedback from hundreds of market participants on how the rules could best be implemented, though no decision has been made to alter the proposal.

Under the US Securities and Exchange Commission proposal, platforms offering tokenized stocks would be required to guarantee investors the same rights granted to traditional shareholders, including dividends and voting rights.

Market participants reportedly raised concerns with the US Securities and Exchange Commission over the potential spread of unauthorized third parties issuing tokens without consent from public companies and over how ownership could be verified on semi-pseudonymous blockchains.

The US Securities and Exchange Commission has taken a more open stance toward crypto-powered financial products under the Trump administration, a shift that has coincided with growing interest from Wall Street in tokenization and stablecoins.

Data from RWA.xyz shows that $34 billion worth of real-world assets has been tokenized, including $1.55 billion in tokenized equities, though adoption has trailed expectations set by Citibank and McKinsey & Company, which predicted in 2022 and 2024 that tokenization would evolve into a multi-trillion-dollar market by 2030.

Crypto Industry Backs Decision to Postpone Rollout

Crypto industry executives have backed the decision by the US Securities and Exchange Commission to delay the exemption. Carlos Domingo, the CEO of crypto tokenization platform Securitize, said in a post on X on Friday that it is important to ensure the “exemption applies to the right instruments.”

Tom Farley, the CEO of crypto exchange Bullish posted to X that the SEC was “realizing that public companies are the only entity who can issue tokens that are a share of stock! Great job delaying and getting this right.”

The delay followed comments from Hester Peirce on Thursday, when she said the exemption was expected to remain “limited in scope” and would only support “digital representations” of equity securities similar to those investors can currently purchase in the secondary market.

In January, distinctions between different types of tokenized securities were made by the US Securities and Exchange Commission, which classified them into “custodial” and “synthetic” forms.

Custodial tokenized securities are issuer-sponsored tokenized stocks held by regulated intermediaries and include full shareholder rights, while synthetic tokenized securities offer price exposure without actual ownership of the underlying shares.