SEC Delays Plans for Tokenized Stock Trading on Crypto Platforms

The securities regulator was preparing to release its “innovation exemption” for tokenized stocks as soon as this week, and a draft of the plan had been prepared and reviewed by staff.

However, the timing has since been pushed back as the SEC weighs input from stock-exchange officials and other market participants, reported Bloomberg, citing people familiar with the matter on Saturday.

The exemption would have allowed the trading of tokenized stocks on decentralized exchanges that do not have the backing or consent of the public companies whose shares they track.

Experts Weigh Pros And Cons

However, the SEC noted that allowing the trading of third-party tokens has raised concerns. Several former regulators reportedly said it was unclear how companies could fulfill the same rights criteria as tokens traded on third-party blockchains.

Bloomberg also reported that public companies might face uncertainty over normal practices such as issuing dividends and counting shareholder votes. There was also concern about tokens ending up in the hands of bad actors overseas.

SEC Commissioner Hester Peirce said earlier this week that any exemption would be “limited in scope” by only permitting “digital representations of the same underlying equity security that an investor could purchase in the secondary market today.”

Meanwhile, Tiger Research director Ryan Yoon cautioned that allowing third-party trading of tokenized stocks could risk liquidity and revenue fragmentation. The move could create “price discrepancies across platforms,” in addition to increasing slippage on large orders, and ultimately “degrading overall market efficiency,” he said.

He added that financial revenues that should accrue to domestic US exchanges could flow offshore instead. Benefits from the move could include faster settlement, fractional ownership, lower transaction costs, the potential for 24/7 trading, and giving non-US citizens access to popular US stocks.

Crypto Markets Bounce on Trump Deal

Crypto markets have recovered from their Saturday slump today following the latest announcement from US President Donald Trump, who said on Truth Social that an agreement has been “largely negotiated, subject to finalization between the United States of America, the Islamic Republic of Iran, and the various other countries.”

The deal would include reopening the Strait of Hormuz, and “final aspects and details of the deal are currently being discussed and will be announced shortly,” he added.

Bitcoin reclaimed $77,000 in early trading on Sunday following its dip to a five-week low of $74,200 on Saturday.

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