The SEC was days away from doing something big for crypto, and then it wasn't. The agency had drafted an "innovation exemption" that would let crypto firms trade tokenized versions of U.S. stocks on the blockchain, with staff reviewing the plan for a rollout as soon as last week.
The release didn't happen. People familiar with the matter told Bloomberg that timing slipped after stock-exchange officials and other market participants saw the details and pushed back.
The biggest sticking point is a piece of the proposal that would have allowed "third-party tokens," meaning a crypto firm could issue a token tied to a public company's stock without that company's permission. The token would be required to deliver the same rights as a regular share, including dividends and voting power.
Former regulators called the setup unworkable, since dividends and voting are hard to deliver when a token can change hands on a pseudonymous blockchain. It's a little like mailing a paycheck to "whoever is holding this scrap of paper right now."
Amanda Fischer, policy director at Better Markets and a former senior SEC official, said, "If I was a corporate executive, I'd be very concerned about the implications."
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SEC Commissioner Hester Peirce posted on X Thursday that she expects any final exemption to be "limited in scope," covering only digital versions of the same stocks investors can already buy in the regular market. SEC Chairman Paul Atkins had previously said the agency was "on the cusp" of releasing it.
Critics worry the broader version could pull in bad actors overseas. NYU Stern professor Austin Campbell warned that the structure "opens a Pandora's box" because dividend payments and shareholder records get messy when tokens land in wallets that don't follow strict know-your-customer rules.
Joe Saluzzi, a partner at New Jersey brokerage Themis Trading, said he's asked a number of clients whether they actually want to trade U.S. stocks 24/7 on a blockchain, and that "nobody is asking for this."
The SEC hasn't killed the exemption, with officials weighing the feedback and likely reworking the third-party token piece before publishing anything. The SEC hasn't given a new timeline.
For tokenization-linked names like Coinbase, Robinhood, and the major exchange operators, the delay cuts two ways. A narrow rule helps incumbents who already run regulated stock plumbing, while a broader rule opens the door for crypto-native platforms to grab a slice of equity trading, so both camps are watching the next draft.
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