SEC Halts Plan to Introduce Tokenized US Stocks Amid Industry Concerns

The US Securities and Exchange Commission (SEC) has put its plan to introduce 'innovation exemption' for tokenized versions of U.S. stocks on hold, citing concerns from market participants.

The SEC had been working on a draft framework that would allow crypto firms and DeFi platforms to trade blockchain-based representations of stocks like Apple or Tesla. This move aimed to enable 24/7 trading, faster settlement, and easier fractional ownership while keeping tokens classified as securities.

However, stock exchange officials and industry players raised alarms over potential liquidity fragmentation, worrying that parallel crypto markets could split trading volume from traditional exchanges, harming price discovery and efficiency. Investor protection also remains a core issue, especially for third-party tokens issued without company consent, which may lack full voting or dividend rights.

The delay reflects caution in a more crypto-friendly regulatory environment, even under SEC Chair Paul Atkins, who had consulted hundreds of participants to balance innovation with safeguards.