The U.S. Securities and Exchange Commission (SEC) has shelved its proposed 'innovation exemption' that would have allowed crypto platforms to issue blockchain-based tokens tracking stocks like Apple and Tesla, enabling 24/7 trading and fractional ownership. The decision follows intense opposition from traditional financial institutions.
Wall Street's Three Core Complaints
According to Bloomberg, critics raised three key issues: liquidity fragmentation — tokenized stock markets running parallel to traditional exchanges could dilute trading volumes and impair price discovery; investor protection gaps — most tokenized stocks are minted by third parties without the issuing company's consent, offering no guarantee of dividend rights or voting power, exposing retail investors to legal and financial risks; and regulatory caution — even SEC Chair Paul Atkins, known for a relatively crypto-friendly stance, opted to gather market feedback before moving forward under pressure from Wall Street.
RWA Boom Continues: $33.8B and Growing 1,600%
Despite the regulatory setback for tokenized stocks, the real-world asset (RWA) tokenization trend remains unstoppable. The total RWA market value has surged past $33.8 billion, growing 1,600% in just two years, with tokenized stocks alone accounting for over $1 billion. Ethereum continues to dominate as the primary issuance chain, followed by Solana. Institutional products like BlackRock's BUIDL fund highlight the genuine demand from traditional capital for blockchain-based assets.
A Revised Framework Expected Later This Year
Insiders indicate the SEC has not abandoned the exemption but is actively refining the framework to address liquidity and investor protection concerns. A more comprehensive regulatory version is likely to be introduced later this year. The episode underscores the ongoing tension between DeFi's disruptive efficiency and TradFi's pursuit of stability.