The U.S. Securities and Exchange Commission has postponed a plan to issue a broad exemption for trading tokenized stocks, a setback for efforts to merge blockchain technology with traditional securities markets. The delay, reported on May 24, follows concerns from stock-exchange officials and other market participants over the proposal's implementation and potential risks.
The exemption was intended to be "limited in scope," SEC Commissioner Hester Peirce said in a post on X on Thursday. She clarified the framework would facilitate trading only of "digital representations of the same underlying equity security that an investor could purchase in the secondary market today, not synthetics," which only provide price exposure without ownership.
A central issue raised by market participants is the proposal's allowance for "third-party tokens," which are digital representations of a company's shares issued without the corporation's approval. According to a Bloomberg report, officials raised alarms about the difficulty of ensuring token holders receive rights like dividends and votes, and how ownership could be reliably tracked on pseudonymous blockchains.
The delay introduces uncertainty for the burgeoning real-world asset (RWA) tokenization sector, which RWA.xyz data shows has already tokenized $34 billion in assets, including $1.55 billion in equities. The move temporarily halts a high-profile push that aligns with Wall Street's growing interest in tokenization, a market that Citibank has projected could reach multiple trillions by 2030.
Several crypto executives voiced support for the SEC's decision to pause and refine the rules.
"Better delay it than get it wrong and unleash all sort of problems," Carlos Domingo, CEO of tokenization platform Securitize, said in a post on X.
Tom Farley, CEO of crypto exchange Bullish, echoed the sentiment, stating the SEC was "realizing that public companies are the only entity who can issue tokens that are a share of stock! Great job delaying and getting this right.” The comments highlight a consensus that clear rules are necessary to prevent fragmentation and protect investors.
The market reacted to the news with a selloff in crypto-related equities. Shares of Coinbase (COIN) retreated 4.4% on Friday, extending their 2026 slump to 18%. Other exchange stocks including Bullish (BLSH) and Gemini Space Station (GEMI) also declined more than 2%.
This article is for informational purposes only and does not constitute investment advice.
