The SEC is postponing the release of the so-called “innovation exception,” which would have allowed crypto platforms to trade tokenized versions of U.S. stocks. The document was ready for publication this week, but the regulator is taking a pause amid objections from stock exchanges and other market participants.
The main point of contention is third-party tokens that would be issued without the consent of the public companies themselves. This approach raises questions: How would companies pay dividends and count shareholder votes if the tokens are traded on pseudonymous blockchain networks? An additional concern is the risk that these tokens could end up in the hands of sanctioned entities through loopholes in the blockchain.
Commissioner Hester Peirce wrote on X that she expects an “narrowly scoped” exception—limited only to digital versions of already existing securities—meaning no third-party tokens would be involved.
The SEC has not yet made a final decision on revising the draft.