SEC Set to Delay Tokenization Exemption Again: Friday Meeting Canceled

The U.S. Securities and Exchange Commission (SEC) has canceled a scheduled open meeting for Friday as it prepares to once again delay the planned “innovation exemption” regulation for tokenization.

According to three industry sources, the SEC was preparing to partially announce an exemption on Friday that would facilitate the issuance and trading of tokenized securities on blockchain infrastructure. However, objections from the White House and Wall Street raised questions regarding the legal basis of the regulation and its potential market impacts. The SEC canceled the meeting on Thursday night.

The meeting’s agenda also included the “Reg Crypto” effort, which targets projects seeking to raise capital via tokens and is separate from the exemption. According to one source, the White House was concerned that the regulation could “stir up a hornet’s nest” while Congress continues its discussions on the Digital Asset Market Clarity Act. SEC staff, meanwhile, are questioning the agency’s authority to grant an exemption of this scale, as well as whether sufficient economic analysis was conducted and necessary procedural steps were completed.

Wall Street calls for rules for tokenized markets

SIFMA, representing major Wall Street institutions, is questioning how blockchain-based trading platforms would comply with existing Regulation NMS rules. These rules require broker-dealers to seek the best possible price for their customers. When decentralized platforms or automated market makers are used, price and transaction costs can diverge from traditional exchanges, complicating the best execution obligation.

SIFMA argues that market structure changes of this scale should be addressed through a public process rather than through exemptions or special permissions. The delay comes at a time when tokenization is growing rapidly. Citi projects that the tokenized asset market could reach $5.5 trillion by 2030, while Nasdaq and the NYSE have announced infrastructure plans, and the DTCC has conducted live test transactions with tokenized securities.