U. S. SEC to again delay 'innovation exemption' for tokenization amid Wall Street, White House concerns
• The Securities and Exchange Commission (SEC) has again delayed its planned “innovation exemption” for tokenized securities amid concerns from the White House and Wall Street firms, industry sources said.
• The White House fears the move could complicate congressional negotiations over the Digital Asset Market Clarity Act, while major financial firms, led by trade group SIFMA, argue that sweeping market-structure changes should go through a formal rulemaking process rather than exemptions.
• The setback comes as tokenization gains momentum across Wall Street, with exchanges and clearinghouses testing blockchain-based trading and analysts projecting a multitrillion-dollar market for tokenized assets by the end of the decade.
The Securities and Exchange Commission (SEC) is set to further delay its anticipated "innovation exemption" designed to accelerate tokenized securities trading after concerns emerged from both the White House and Wall Street over the proposal's legal footing and potential market impact, according to three industry sources familiar with the matter.
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.