The United States Securities and Exchange Commission (SEC) has abruptly cancelled a meeting to discuss new crypto-related rules, delaying its highly anticipated “innovation exemption” for tokenized securities.
According to industry sources familiar with the matter, the exemption was delayed after the White House and Wall Street flagged legal and market impact concerns.
SEC Pulls Plug On Friday Meeting
The Securities and Exchange Commission has cancelled a meeting to discuss new crypto-related rules, attributing the delay to an “unforeseen scheduling issue.” The commission was due to vote on innovation exemptions allowing crypto startups to raise capital without complying with existing securities laws, easing regulatory hurdles for cryptocurrency firms.
The SEC was expected to share details about the exemptions at the Friday meeting, and discuss the “Reg Crypto” rulemaking, a parallel effort to create rules for projects using tokens to raise funds.
White House and Wall Street Raise Concerns
According to a CoinDesk report, a source familiar with the ongoing discussions said the White House is concerned the proposal could disrupt ongoing negotiations regarding the CLARITY Act and complicate efforts to advance broader crypto legislation.
The source also highlighted the SEC staff’s focus on the legal authority to issue broad relief, and whether sufficient economic analysis and procedural steps were completed to justify an exemption.
Financial institutions have also flagged concerns. SIFMA, a Wall Street trade group, opposes the SEC’s latest initiative.
According to an industry source, SIFMA is concerned about how blockchain-based trading venues fit within existing equity-market rules. It highlighted that brokers are obligated to find the best execution for their customers. Prices are linked across exchanges and require brokers to execute trades at the best available protected quotation.
SIFMA argued that trading securities through decentralized exchanges or automated market makers (AMMs) could complicate the framework, as prices and execution costs may differ from traditional trading venues.
A Sweeping Overhaul
The SEC under current chair Paul Atkins has abandoned Gary Gensler’s regulation-by-enforcement approach. Instead, it has outlined plans to overhaul capital markets regulations to accommodate crypto tokens and blockchain-based trading.
Atkins has also publicly backed crypto companies and their interpretation that crypto tokens are commodities, not securities.
President Trump has made crypto reform a key priority during his second term. Under the Trump administration, the SEC has dismissed lawsuits against Coinbase, Binance, and several other crypto companies filed during Gensler’s tenure as SEC chair.
Atkins has also stated that the SEC will bring rules allowing companies to sell tokens and raise capital. He also mooted a fit-for-purpose startup exemption that would allow entrepreneurs to raise capital and operate outside the agency’s rules for a specified period.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
