SEC Again Delays Tokenization Exemption as It Scraps Reg Crypto Meeting

The Securities and Exchange Commission postponed its long-awaited “innovation exemption” for tokenized securities. It also canceled a Friday open meeting on its first major crypto rulemaking. Neither effort has a new date. Wall Street and the White House pushed back, and the agency blinked.

Commission staff scrapped the Aug. 14 open meeting on “Reg Crypto” late on Aug. 13, according to CoinDesk. The session would have addressed a framework for token-based fundraising under federal securities laws. It was also expected to preview the innovation exemption, a separate initiative to let firms issue and trade tokenized securities on blockchain rails. No rescheduled date has been set.

The dual delay deepens a stall that has lasted months. The SEC had appeared ready to release the innovation exemption in May after repeatedly pushing back an earlier self-imposed deadline. It did not. Commissioner Hester Peirce, who leads the agency’s crypto task force, is the public face of both efforts.

Three industry sources familiar with the matter told CoinDesk the latest postponement stems from two fronts. SIFMA, the Wall Street trade group whose members include major broker-dealers and investment banks, emerged as one of the main groups halting the initiative. The White House, separately, worried the proposal could “kick a hornet’s nest” while Congress negotiates the Digital Asset Market Clarity Act, or CLARITY Act, per one person familiar with the discussions.

Market structure sits at the center of SIFMA’s objections. In a June 30 letter to the SEC, the group wrote that “these types of significant structural changes should be considered and made through an open and transparent process” with public notice and comment. The specific concern: how blockchain-based trading venues would fit within existing equity-market rules. Regulation NMS links prices across exchanges and requires brokers to execute trades at the best available quotation. That framework becomes far less workable if tokenized securities trade through decentralized venues or automated market makers.

The SEC had proposed in June to eliminate Rule 611 of Regulation NMS, the Order Protection Rule. The move was widely read as removing one of the biggest regulatory obstacles to tokenized securities trading. SIFMA argued that broader market-structure changes should not be implemented through exemptions or no-action relief. SIFMA did not immediately respond to a request for comment. An SEC spokesperson did not immediately respond to questions about timing decisions.

The practical upshot: the agency has no scheduled public step on crypto rulemaking. Reg Crypto, if proposed, would be the first major crypto-specific rule issued by the SEC. It targets projects raising capital by issuing tokens. The innovation exemption targets the trading and settlement of tokenized securities. Peirce told CoinDesk she did not expect the exemption to cover synthetic tokens. In a social media post, she said she expected it to allow tokens that “would facilitate trading only of digital representations of the same underlying equity security that an investor could purchase.”

SEC staff have also turned to a more fundamental question. Does the agency have the legal authority to issue broad relief in the first place? Sources said staff are focused on whether the commission has completed sufficient economic analysis and followed the procedural steps required to justify an exemption. Some industry insiders were told the effort may need to wait for the outcome of the CLARITY Act, which would assign jurisdiction over crypto’s spot market between the SEC and the CFTC. That bill has not passed Congress.

While the securities regulator pulls back, the derivatives regulator is stepping forward. The CFTC’s Innovation Advisory Committee will hold a meeting on Aug. 20 to address crypto asset regulation, artificial intelligence, and prediction markets, Cointelegraph reported. The committee is exploring whether the CFTC can regulate crypto markets under its existing authority rather than waiting for the CLARITY Act to pass.

The split is stark. One regulator cancels. The other schedules. The CFTC’s move is exploratory. There is no indication the Aug. 20 meeting will produce formal rule proposals. But it signals a willingness to test the limits of current law while Congress stalls.

The backdrop is a tokenization push that has drawn the SEC’s stated support under Chairman Paul Atkins, who has framed blockchain rails as a way to modernize financial markets. Nasdaq and NYSE have unveiled plans for tokenized securities infrastructure. The DTCC processed its first live production trades with tokenized securities last month as part of a test phase. Citi analysts have projected tokenized assets could become a $5.5 trillion market by 2030.

The industry is still waiting on the rule that would let that market grow under clear terms. Traders, as ever, disagree on whether the SEC will move before Congress does.