The U.S. Securities and Exchange Commission has postponed the planned release of an innovation exemption that would allow domestic crypto platforms to trade tokenized instruments representing shares of public companies.
Agency staff had prepared a draft of the exemption and were positioned to publish it as soon as this week. That timing has now been pushed back while the SEC reviews comments and further engages with officials from stock exchanges and other market participants who have met with staff in recent days to understand the proposal's details.
A central point of contention is a provision that would permit trading in third-party tokens - tokens issued by entities other than the underlying public companies and without those companies' backing or consent. Market participants raised concerns about how such arrangements would function alongside existing corporate governance and shareholder frameworks.
The SEC has not decided to alter the draft proposal, the agency said. Under the present text of the proposal, platforms that offer tokens tied to equities would be required to ensure token-holders receive the same entitlements held by conventional shareholders, specifically dividends and voting rights.
Former regulators who reviewed the plan warned that it is unclear how companies could practically satisfy those obligations given that tokens circulate on pseudonymous blockchain networks where ownership can change hands without clear, on-ledger identities. That technical uncertainty underpins part of the agency's additional review.
Not all officials within the SEC are said to favor permitting trading of third-party tokens, reflecting internal divergence over how broadly the exemption should be drawn.
Commissioner Hester Peirce - identified as an ally of SEC Chairman Paul Atkins - posted on X on Thursday that she expects the innovation exemption to be narrowly tailored, enabling trading only of digital representations of the identical underlying equity security that an investor could buy on the secondary market.
Context and next steps
The delay gives the SEC more time to weigh technical and regulatory feedback from market participants and exchange officials. How the agency resolves questions around third-party tokens and the mechanics of delivering shareholder rights will shape whether and how tokenized stock trading can be implemented under the proposed exemption.