SEC delays tokenized-stock exemption after exchanges’ concerns

The Securities and Exchange Commission has delayed its proposed ‘innovation exemption’ to allow trading of tokenized stocks after U.S. stock exchanges raised concerns about implementation, ownership verification and unauthorized token issuance. The agency had planned to issue the exemption this week but pushed back the timeline for further review.

SEC staff reviewed a draft of the exemption and solicited input from hundreds of market participants. Under the proposal, eligible platforms would be permitted to offer tokenized representations of shares only if those platforms guarantee investors the same rights as ordinary shareholders, including dividends and voting.

Exchange officials raised practical questions about how to prevent unauthorized parties from issuing tokens that claim to represent shares without a company’s consent. They also questioned how legal ownership would be proven on semi‑pseudonymous blockchains where user identities are limited and legal title can be hard to establish.

Those concerns led the SEC to seek clearer mechanisms for issuer authorization and for mapping blockchain records to legal ownership before finalizing the exemption. Agency staff said their next work will focus on technical standards for custody, procedures to ensure company authorization of tokens, and requirements for transfer and voting processes on tokenized platforms.

Executives in the tokenization industry welcomed the delay. Carlos Domingo, chief executive of Securitize, posted that the exemption must apply to the appropriate instruments and added that it was ‘better delay it than get it wrong and unleash all sort of problems.’ Tom Farley, chief executive of Bullish, wrote that the SEC appears to be recognizing that public companies should be the only entities that issue tokens representing shares and called the postponement responsible.

Commissioner Hester Peirce indicated she expects any exemption to be limited in scope and said she would support only ‘digital representations’ of equity that resemble what investors can buy in the existing secondary market.

In January the SEC distinguished between custodial tokenized securities, which are issuer‑sponsored and held by regulated intermediaries and intended to carry full shareholder rights, and synthetic tokenized securities, which provide price exposure without conferring legal ownership of the underlying shares.

Data from RWA.xyz shows about $34 billion in real‑world assets have been tokenized to date, including roughly $1.55 billion in tokenized equities. Those totals remain below earlier forecasts that projected tokenization could reach a multi‑trillion‑dollar market by 2030.

The SEC will continue to gather feedback from market participants as it refines the exemption language and addresses the legal and technical questions raised by exchanges and other stakeholders.