The securities regulator had been preparing to publish an “innovation exemption” for tokenized stocks as soon as this week, with a draft plan reportedly completed and reviewed by staff.
But the timeline has been delayed as the SEC considers feedback from stock-exchange officials and other market participants, Bloomberg reported, citing people familiar with the matter. Regulators are taking extra time to weigh concerns and input before moving forward.
The proposed exemption would have permitted trading of tokenized representations of U.S. stocks on decentralized platforms that operate without the endorsement or consent of the public companies whose shares those tokens track.
Experts Weigh Pros and Cons
Allowing third-party tokenized stock trading has raised several regulatory and practical questions. Former regulators told Bloomberg it is unclear how token issuers or platforms would ensure token holders receive the same shareholder rights and protections that accompany shares traded on traditional exchanges.
Public companies could face uncertainty around routine corporate actions such as dividend distributions, shareholder vote tabulation, and other record-keeping obligations. Regulators also expressed concerns about tokens potentially being held or controlled by bad actors overseas, complicating enforcement and investor protection.
SEC Commissioner Hester Peirce said any exemption would be “limited in scope,” permitting only “digital representations of the same underlying equity security that an investor could purchase in the secondary market today.” That approach aims to restrict the exemption to straightforward on-chain equivalents of listed securities rather than novel or synthetic instruments.
“The SEC deserves a lot of credit for preparing diligently for legislation and for moving ahead expeditiously under its existing authority to provide clarity to markets in adopting tokenization in capital markets,” said Coinbase chief legal officer Paul Grewal.
Paul Grewal and other industry figures have praised the SEC’s efforts to clarify how tokenization might fit under existing securities laws while urging careful, narrow implementation that preserves market integrity.
Tiger Research director Ryan Yoon cautioned that enabling third-party trading of tokenized stocks could fragment liquidity and revenue. He warned the change might create price discrepancies across platforms, increase slippage on large orders, and ultimately reduce overall market efficiency. Yoon also noted the risk that trading revenues and related economic benefits could migrate offshore, rather than accruing to domestic U.S. exchanges.
Proponents of tokenization argue the move could bring real benefits: faster settlement, fractional ownership, lower transaction costs, potential for round-the-clock trading, and increased access to popular U.S. equities for non-U.S. investors. Regulators must weigh these potential advantages against the operational, legal, and market-structure risks.
Crypto Markets Bounce on Trump Announcement
Crypto markets recovered from a weekend slump after an announcement by U.S. President Donald Trump on Truth Social that an agreement has been “largely negotiated, subject to finalization between the United States of America, the Islamic Republic of Iran, and the various other countries.” According to the post, the agreement would include reopening the Strait of Hormuz, with final details still being discussed.
Following the announcement, Bitcoin briefly reclaimed $77,000 in early Sunday trading, recovering from a five-week low of $74,200 reached on Saturday. Market participants attributed part of the volatility to shifting geopolitical expectations and the broader risk-on mood that followed the news.
As regulators continue to debate a framework for tokenized securities, market observers expect further consultation and possible revisions before any formal exemption is finalized. The interplay between innovation, investor protection, and market structure will remain central to the discussion as policymakers and industry participants seek a balanced approach.