CoinDesk
The SEC has again delayed its planned "innovation exemption" for tokenized securities, the latest in a series of setbacks for the agency's push to ease regulatory hurdles for blockchain-based trading. The Wall Street trade group SIFMA led opposition, arguing sweeping market-structure changes should go through formal rulemaking, while the White House worried the proposal could "kick a hornet's nest" while Congress negotiates the Digital Asset Market Clarity Act. The SEC had been ready to release at least part of the exemption alongside its now-canceled "Reg Crypto" open meeting on Friday and canceled that meeting late Thursday. Industry sources told CoinDesk the effort may now need to wait for the Clarity Act's outcome.
Why it matters
The resistance cuts both ways. SIFMA's June 30 letter argued that changes of this scope belong in an open notice-and-comment process, not in an exemption or no-action letter, and raised specific concerns about how tokenized venues would satisfy Reg NMS Rule 611 and brokers' best-execution obligations. SEC staff, separately, have grown uneasy about the agency's legal authority to issue broad relief without completed economic analysis. Together those concerns stall the one regulatory vehicle Chairman Paul Atkins has been building toward since taking the chair, and leave a multitrillion-dollar pipeline waiting on Capitol Hill.
Market impact
The pause lands just as Wall Street infrastructure goes live. Nasdaq and the NYSE are building tokenization rails, and the Depository Trust & Clearing Corporation ran its first live production trades with tokenized securities last month. Citi projects tokenized assets could grow into a $5.5 trillion market by 2030. With the SEC's exemption on ice and Congress still negotiating the Clarity Act, the timeline for that market's regulatory framework now sits with lawmakers rather than the agency, which is exactly the outcome SIFMA was pushing for.
Frequently asked questions
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Why did the SEC delay the tokenization exemption again?
The SEC pulled back after the Wall Street trade group SIFMA argued the exemption should go through formal rulemaking, while the White House worried it could complicate negotiations over the Digital Asset Market Clarity Act.
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What is the SEC's innovation exemption?
It is a planned carve-out that would have eased regulatory hurdles for firms issuing and trading tokenized securities on blockchain rails under existing securities laws, without going through a formal notice-and-comment rulemaking.
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What did SIFMA argue against the exemption?
SIFMA's June 30 letter said sweeping market-structure changes belong in an open notice-and-comment rulemaking, not in an exemption or no-action letter, and raised concerns about Reg NMS Rule 611 and best-execution obligations on tokenized venues.
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How big could the tokenized-asset market get?
Citi projects tokenized assets could grow into a $5.5 trillion market by 2030, while Nasdaq, NYSE and the DTCC are already building and testing live production tokenization infrastructure on Wall Street.
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What happens next for tokenization regulation in the US?
Industry sources said the innovation exemption may now wait for Congress to finish the Digital Asset Market Clarity Act, which would set the broader market structure for digital assets.
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