Late Thursday night, the SEC canceled its planned Friday open meeting — one that was set to discuss the "Reg Crypto" rule proposal and simultaneously reveal parts of the "innovation exemption" for tokenized securities. The cancellation came with no notice and no new date attached.
According to three sources familiar with the matter, the delay is being driven by pressure from two directions: the White House and Wall Street.
On the White House side, one source said officials are worried the exemption could "kick a hornet's nest" while Congress is still hammering out the Digital Asset Market Clarity Act, potentially complicating the broader crypto legislation negotiations. Meanwhile, SEC staff themselves are reportedly wrestling with whether they even have the legal authority to issue an exemption of this scope — including whether the required economic analysis and procedural steps have actually been completed. Industry insiders have been told this may need to wait until the Clarity Act's outcome is settled.
On the Wall Street side, the pushback is being led by SIFMA — the trade group representing major brokerages and investment banks. SIFMA's concerns center on how tokenized trading venues would fit into existing equity market rules, particularly brokers' "best execution" obligations to clients. Under the current Regulation NMS framework, quotes across exchanges are linked, and brokers are generally required to execute at the best publicly available price. But if tokenized securities end up trading on decentralized platforms or automated market makers (AMMs), pricing and execution costs could follow an entirely different logic. This past June, the SEC already proposed eliminating Rule 611 of Regulation NMS — the Order Protection Rule — a move widely seen as clearing a major obstacle to tokenized securities trading. SIFMA's letter to the SEC on June 30 put it bluntly: changes of this structural magnitude "should be handled through an open and transparent process" — meaning a formal notice-and-comment rulemaking, not shortcuts like exemptions or no-action relief.
Not the First Time It's Been Pulled
This exemption actually looked ready to be released back in May, with the SEC repeatedly pushing back its own self-imposed deadlines. The concern back then was whether the exemption would let security token issuers create assets without actually holding the underlying securities — essentially "synthetic" security tokens. That possibility rattled companies that issue actual securities, and in the end, the SEC never released that version of the proposal. SEC Commissioner Hester Peirce told CoinDesk at the time that she didn't believe the exemption would cover synthetic tokens, adding on social media that she expected the exemption would only allow tokens to trade as digital representations of the same underlying stock securities investors could already buy.
This latest delay comes at a moment when Wall Street is placing heavy bets on tokenization — Nasdaq and the NYSE have both unveiled tokenized securities infrastructure plans, and DTCC, the backbone of Wall Street's securities settlement system, completed its first live trades of tokenized securities in testing just last month. Citi analysts estimate the tokenized asset market could reach $5.5 trillion by 2030. SEC Chair Paul Atkins has grown increasingly supportive of tokenization, framing blockchain as a tool to modernize financial markets — but exactly how this regulatory path will unfold remains unclear, with no new timeline yet from the SEC.
