Overview
- The SEC has delayed publishing its proposed “innovation exemption” after heavy pushback from exchanges, trading firms and market infrastructure providers who raised questions about how tokenized stocks would preserve shareholder rights.
- Officials and market participants urged the agency to limit tokenized trading to issuer‑backed or custodial tokens that tie directly to legal ownership and convey voting and dividend rights.
- Critics warned that third‑party or synthetic tokens could create a parallel on‑chain market that fragments liquidity, allows the same security to trade in disconnected venues and risks diverging prices from the main U.S. market.
- Prominent voices ranged from Citadel Securities and exchanges raising market‑structure and investor‑protection concerns to industry executives supporting the pause and urging rules that permit only company‑authorized tokenization; investor Michael Burry also published a public critique.
- Key technical and legal questions remain unresolved, including how to verify ownership on semi‑pseudonymous blockchains and how to align on‑chain settlement with existing clearing systems, and regulators will need to answer those before reopening the proposal.