SEC delays tokenization exemption as CLARITY Act stalls

The Securities and Exchange Commission has delayed its proposed tokenization innovation exemption while Section 10505 of the CLARITY Act remains unresolved. The pause affects plans to allow limited testing of blockchain-based trading for tokenized U.S. equities. The postponement occurred the same week the agency canceled a planned vote on exemptions for crypto startup fundraising.

Section 10505 of the Senate CLARITY Act would confirm that tokenized securities are securities for regulatory purposes and direct the SEC to study how they should be treated. The provision covers custody rules, investor protections, cross-border issues and coordination among regulators. Negotiators from regulatory agencies and industry participants spent months discussing language for that section; sources indicate the SEC is keeping the exemption on hold to avoid disrupting those talks.

SEC Chair Paul Atkins had prioritized the tokenization exemption as part of his Project Crypto agenda and had indicated the rule was near release. The proposed safe-testing framework would have allowed firms to experiment with tokenized equities without fully meeting exchange and broker-dealer requirements. Firms preparing trading products tied to the proposal now face uncertainty about the timing of a final rule.

Separately, the SEC canceled a Friday meeting at which commissioners were to vote on an exemption for early-stage crypto fundraising, part of the broader Regulation Crypto package. An SEC spokesperson attributed the cancellation to an unforeseen scheduling issue and said the meeting would be “moved to a later date,” adding the agency remains “committed to delivering on the President’s agenda to bring certainty to the crypto space.” The startup exemption would have permitted certain early-stage crypto companies to raise capital without full compliance with standard securities-offering rules; regulators have described the approach as a way to keep token issuance onshore. That vote would have been the SEC’s first formal rulemaking action under the Regulation Crypto proposals, which also include token registration exemptions, a safe harbor for decentralizing projects, and new custody and trading-venue rules for broker-dealers.

Legislative developments on the CLARITY Act are expected to influence the SEC’s timetable. The House approved its version in July 2025, and the Senate Banking Committee advanced a draft on a 15-9 vote in May. The bill missed a planned August window in the Senate; a procedural vote is not expected before September 15 following the chamber’s recess. The SEC has not set new dates for the tokenization exemption or the postponed startup-exemption vote. If the CLARITY Act advances, the agency could adjust any exemption to align with the statute.