U.S. SEC to again delay 'innovation exemption' for tokenization amid Wall Street, White House concerns
The SEC has delayed its 'innovation exemption' for tokenized securities, citing concerns from the White House and traditional financial institutions like SIFMA. The proposal aimed to ease regulatory hurdles for blockchain-based trading but faced pushback regarding market structure and existing securities laws.
Why it matters
The delay underscores the significant friction between legacy financial market regulations and the push for blockchain-based asset tokenization.
The exemption, which had been expected to be released in part as soon as this Friday, would have eased regulatory hurdles for firms seeking to issue and trade tokenized securities on blockchain rails under existing securities laws. The SEC had announced an open meeting this Friday to discuss its planned "Reg Crypto" rulemaking, a parallel but unrelated effort to create rules for projects looking to fundraise using tokens. The commission was also expected to share details about the innovation exemption at the same meeting, but not release it through a formal notice-and-comment process. The commission canceled that Friday meeting late Thursday.
One person familiar with the discussions said the White House worried the proposal could "kick a hornet's nest" while Congress is still negotiating the Digital Asset Market Clarity Act, potentially complicating efforts to advance broader crypto legislation.
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