SEC Delays Tokenized Stock Trading Plans on Crypto Platforms

The US Securities and Exchange Commission (SEC) has put off its plan to introduce an exemption for cryptocurrency exchanges to trade tokenized real-world assets. The decision comes as the SEC weighs input from industry officials and market participants, reported Bloomberg.

According to sources familiar with the matter, the SEC had been preparing to release a draft of the innovation exemption by this week. However, due to the complexities involved, the timing has been pushed back.

The proposed exemption would have allowed tokenized stocks to be traded on decentralized exchanges that do not have the backing or consent of the public companies whose shares they track. However, the SEC has raised concerns about potential risks and uncertainties associated with third-party tokens, including difficulties in fulfilling rights criteria, uncertainty over normal practices such as issuing dividends and counting shareholder votes, and concerns about tokens ending up in the hands of bad actors overseas.