A major financial industry trade group is urging the U.S. Securities and Exchange Commission (SEC) to reject a series of regulatory relief requests from crypto firms aiming to offer tokenized stocks.
In a letter submitted Monday, the Securities Industry and Financial Markets Association (SIFMA)—which represents securities issuers and financial institutions—voiced “significant concern” over reports that crypto companies are seeking no-action or exemptive relief to launch tokenized equities or other securities.
No-action relief would shield firms from enforcement action over certain products, while exemptive relief would allow the SEC to waive specific securities regulations, often as part of a pilot program or trial.
Addressed to the SEC’s Crypto Task Force, SIFMA warned that granting such exemptions could allow crypto firms to operate outside the established federal securities framework, potentially weakening vital investor protections.
“The SEC should deny these requests,” the letter stated, “and avoid making major changes to the regulatory structure for securities markets through expedited no-action or exemptive relief. Such decisions should instead follow a thorough notice-and-comment process.”
“These policy questions are simply too important to be addressed purely through immediate no-action or exemptive requests, and such requests should be rejected.”
SEC Weighs Potential Rule Change for Tokenized Securities
SIFMA’s letter follows remarks made in May by SEC Commissioner Hester Peirce, who also leads the agency’s Crypto Task Force. Peirce said the SEC is “considering a potential exemptive order” for companies using blockchain technology to “issue, trade, and settle securities.”
According to Peirce, firms aiming to build platforms for tokenized securities may be required to register with the SEC—a process that can be costly and potentially discourage companies from entering the space due to the limited number of compliant trading venues.
“Exemptive relief could help resolve this chicken-and-egg problem,” she noted, referring to the challenge of launching tokenized securities without a viable platform ecosystem.
Peirce also emphasized that firms shouldn’t be forced to follow outdated regulations that were crafted long before today’s blockchain technologies existed.
TradFi Unlikely to “Relinquish Power Easily”
Alexander Grieve, vice president of government affairs at venture firm Paradigm, posted on X Wednesday that SIFMA members are primarily looking to “protect their market position,” as tokenized securities could open the door for a wider range of platforms to offer trading in assets that function much like traditional stocks.
Grieve noted that with every new regulatory issue or technological shift, there’s typically pushback from established players. “There’s always incumbent opposition,” he wrote, pointing to examples like banks resisting stablecoins and crypto derivatives competing with traditional offerings from firms such as CME Group.
“The old gods of finance do not share power lightly.”
Bill Hughes, global regulatory lead at blockchain software firm Consensys, commented on X that “SIFMA’s primary argument is procedural—and a reasonable one at that.”
“If we are going to be changing substantive rules on how retail participants can access securities — specifically publicly traded stock, then we should be doing that through notice and comment rulemaking and not particularized exemptive relief or no-action assurances.”
“It seems pretty clear, having certain assets with one foot in the less intermediated and controlled crypto world and the other in the heavily intermediated and controlled tradfi capital market is a regulatory policy mess,” Hughes said.
“Conundrums abound. We got a lot to figure out,” he added.
Coinbase and Kraken Explore Tokenized Stock Offerings
Crypto exchanges Coinbase and Kraken are actively pursuing opportunities to launch tokenized securities trading in the U.S., pending approval from the SEC.
Coinbase’s chief legal officer, Paul Grewal, has reportedly said that securing approval for “tokenized equities” is a “huge priority” for the company.
Meanwhile, Kraken began offering tokenized stock trading on its platform this week, with tokens backed 1:1 by shares in major U.S. companies like Apple and Microsoft.
However, the service is not available to users in the U.S., Canada, the EU, the UK, or Australia.
