The Securities and Exchange Commission (SEC) is set to further delay its anticipated "innovation exemption" designed to accelerate tokenized securities trading after concerns emerged from both the White House and Wall Street over the proposal's legal footing and potential market impact, according to three industry sources familiar with the matter.
The exemption, which had been expected to be released in part as soon as this Friday, would have eased regulatory hurdles for firms seeking to issue and trade tokenized securities on blockchain rails under existing securities laws. The SEC had announced an open meeting this Friday to discuss its planned "Reg Crypto" rulemaking, a parallel but unrelated effort to create rules for projects looking to fundraise using tokens. The commission was also expected to share details about the innovation exemption at the same meeting, but not release it through a formal notice-and-comment process. The commission canceled that Friday meeting late Thursday.
One person familiar with the discussions said the White House worried the proposal could "kick a hornet's nest" while Congress is still negotiating the Digital Asset Market Clarity Act, potentially complicating efforts to advance broader crypto legislation.
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