The Securities Industry and Financial Markets Association (SIFMA) has called on the SEC to reject an increasing number of requests from crypto companies to allow for tokenized stocks.
SIFMA's Appeal to the SEC
SIFMA expressed "significant concern" in a letter sent to the SEC. These requests from crypto firms seek no-action or exemptive relief for issuing and trading tokenized equities outside traditional regulatory frameworks.
SIFMA argued that granting such relief would allow crypto companies to distribute securities without adhering to vital investor protection requirements included in federal securities laws. The group urged the SEC to use its formal notice-and-comment procedure rather than providing immediate exemptions.
"These policy questions are too consequential to be handled through rushed exemptions," SIFMA noted.
SEC Considers Flexibility
The letter from SIFMA came shortly after SEC Commissioner Hester Peirce revealed that the agency is weighing a potential exemptive order for blockchain-based platforms looking to issue, trade, and settle securities. Peirce noted that the current registration requirements might deter firms from launching tokenized securities platforms, and limited trading venues could stifle innovation.
"Exemptive relief could help break this chicken-and-egg cycle," Peirce stated.
Crypto Firms Initiate Tokenized Stock Trading
Crypto exchanges Coinbase and Kraken have shown interest in offering tokenized stock trading with regulatory approval. Coinbase's legal chief, Paul Grewal, recently called the approval of tokenized equities a "huge priority" for the platform.
Meanwhile, Kraken has already launched tokenized stock trading, backed one-to-one by major U.S. equities such as Apple and Microsoft, although this service currently excludes users in the U.S., Canada, Europe, the U.K., and Australia, reflecting the complex legal environment.
The situation surrounding tokenized stocks continues to provoke debate among regulators and financial market participants, and further SEC decisions may significantly impact the development of the crypto industry.
