SEC Delays Tokenized Stocks Innovation Exemption Amid Synthetic Token Concerns

The SEC delayed its innovation exemption for tokenized stocks after pushback from stock exchanges over third-party synthetic tokens, with Commissioner Peirce clarifying scope on X.

The U.S. Securities and Exchange Commission has pulled back plans to release its “innovation exemption” for tokenized stocks, Bloomberg Law reported Friday, citing people familiar with the matter. The agency’s staff had a draft prepared and internally reviewed, and the rule was expected to drop as early as last week as part of SEC Chair Paul Atkins’ “Project Crypto” initiative.

The proximate cause of the delay was not crypto opposition. It was pushback from stock-exchange officials and other traditional market participants who held discussions with SEC staff in recent days. The central concern was a provision in the draft that would permit trading in third-party tokens, digital representations of company shares issued by intermediaries without the underlying corporation’s knowledge or approval. Exchanges flagged the risk of market fragmentation if the same equity could be tokenized and traded across multiple onchain venues without issuer involvement.

This story is an excerpt from the Unchained Daily newsletter.

Commissioner Hester Peirce moved quickly to clarify scope.

“I’ve always expected that it’d be limited in scope and 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,” she wrote on X.

Peirce posted twice in unusual public commentary on a pending rule, pushing back on what she called “hyperbole” about the framework. Robert Leshner, founder of tokenization firm Superstate, told The Block that “Commissioner Peirce clarified again today that the innovation exemption is focused on issuer-led tokens, and tokenized entitlements from SEC-registered firms, which are the approaches best equipped to convey all the same rights and obligations as ‘normal’ securities.”

The delay does not cancel the exemption, but it defers action indefinitely pending resolution of the third-party token question, shareholder rights, dividend administration, and other operational details. The framework was meant to complement existing exchange-level approvals. Nasdaq won SEC approval for tokenized equity trading in March, followed by NYSE in April.

Both operate under the Depository Trust Company’s three-year tokenization pilot. The innovation exemption was supposed to take a different approach, opening tokenized stock trading to crypto-native platforms like Coinbase rather than keeping it within traditional market structure.

The pullback comes as tokenized assets continue to scale. Tokenized Treasury products have passed $15.35 billion in total value locked, and Jump Trading and Securitize announced a partnership earlier this month to trade tokenized stocks. The January SEC guidance clarifying that tokenizing a security does not change its regulatory classification remains in effect.