{
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    "date": "2025-11-27T09:29:08",
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    "slug": "global-exchanges-urge-sec-to-curb-broad-crypto-exemptions-warn-on-tokenized-stock-risks",
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    "title": {
        "rendered": "Global Exchanges Urge SEC to Curb Broad Crypto Exemptions, Warn on Tokenized Stock Risks"
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        "rendered": "<div>\n<div>\n<h4 color=\"#333\">In brief<\/h4>\n<ul>\n<li>The World Federation of Exchanges urged the SEC to limit exemptions for crypto platforms.<\/li>\n<li>Tokenized stock products marketed without proper safeguards have \u201calarmed\u201d the federation over possible risks.<\/li>\n<li>The SEC is weighing a sandbox-style framework that could allow temporary relief for crypto firms.<\/li>\n<\/ul>\n<\/div>\n<p><span>A federation of stock exchanges has sent a letter to the U.S. Securities and Exchange Commission, urging the regulator to remove special exemptions given to crypto firms offering tokenized stocks.<\/span><\/p>\n<p><span>In a <\/span><a href=\"https:\/\/www.sec.gov\/files\/ctf-written-final-letter-sec-wfe-conditions-11-22-2025.pdf\" target=\"_blank\"><span>letter<\/span><\/a><span> sent last week to the SEC\u2019s <\/span><a href=\"https:\/\/decrypt.co\/308559\/secs-crypto-task-force-assembles-mix-of-agency-veterans-industry-experts\" target=\"_blank\"><span>Crypto Task Force<\/span><\/a><span>, the World Federation of Exchanges, whose members include the Nasdaq, Cboe, and CME Group, told the agency that exemptive relief should not be used to fast-track crypto trading platforms into roles that resemble national securities exchanges without requiring full compliance.<\/span><\/p>\n<p><span>The federation stated that it is \u201calarmed\u201d at \u201cthe plethora of brokers and crypto-trading platforms offering or intending to offer so-called tokenised US stocks,\u201d citing a <\/span><a href=\"https:\/\/www.world-exchanges.org\/our-work\/articles\/mimicking-tokenised-equities\" target=\"_blank\" rel=\"nofollow external noopener\"><span>position paper<\/span><\/a><span> it published in late August this year.<\/span><\/p>\n<p><span>Such products are \u201cmarketed as stock tokens or the equivalent to stocks when they are not,\u201d the letter signed by CEO Nandini Sukumar reads.<\/span><\/p>\n<p><span>\u201cWhile we are supportive of the principle of exemptive relief, we are concerned that the broad use of such relief presents risks to investors and market integrity,\u201d the letter continued.<\/span><\/p>\n<p><a href=\"https:\/\/www.sec.gov\/rules-regulations\/exchange-act-exemptive-notices-orders\/exchange-act-exemptive-applications\" target=\"_blank\"><span>Exemptive relief<\/span><\/a><span> is a regulatory mechanism that allows a company or platform to bypass specific legal requirements when the SEC determines that doing so is in the public interest and doesn&#8217;t harm investor protection. It can be granted either temporarily or permanently.<\/span><\/p>\n<p><span>The WFE said it supports the SEC\u2019s right to use exemptive relief, but argued that it is appropriate only where \u201crelief is reasonably necessary for a firm to provide a product or service on a level playing field\u201d as well as if it is \u201cfound to be consistent with the interests of the public and the protection of investors.\u201d<\/span><\/p>\n<p><span>The federation\u2019s stance comes as the SEC weighs a <\/span><a href=\"https:\/\/decrypt.co\/314552\/sec-crypto-regulatory-sandbox\" target=\"_blank\"><span>potential sandbox<\/span><\/a><span> framework that could grant time-limited exemptive relief to crypto platforms offering tokenized stocks, part of a broader effort to explore how digital asset markets might operate under modified regulatory conditions.<\/span><\/p>\n<p><span>In October, SEC Chair Paul Atkins <\/span><a href=\"https:\/\/decrypt.co\/343353\/sec-formalize-crypto-innovation-exemptions\" target=\"_blank\"><span>said<\/span><\/a><span> the agency had been exploring formal \u201cinnovation exemptions\u201d that could give crypto firms temporary relief from existing rules.\u00a0<\/span><\/p>\n<p><span>The framework, <\/span><a href=\"https:\/\/decrypt.co\/340898\/sec-chair-paul-atkins-crypto-innovation-exemption-coming-this-year\" target=\"_blank\"><span>estimated to arrive<\/span><\/a><span> within the year, would allow platforms to pilot products like tokenized stocks under SEC supervision while regulators assess long-term policy needs.<\/span><\/p>\n<p><span>Earlier efforts to launch tokenized stock products in the U.S. have drawn scrutiny, including Robinhood\u2019s <\/span><a href=\"https:\/\/decrypt.co\/328331\/controversy-robinhood-tokenize-stocks\" target=\"_blank\"><span>controversial<\/span><\/a><span> move to offer blockchain-based equities through a Europe-based partner.<\/span><\/p>\n<p><i><span>Decrypt<\/span><\/i><span> has reached out to the SEC and the World Federation of Exchanges for comment.<\/span><\/p>\n<div>\n<h3>Daily Debrief Newsletter<\/h3>\n<p>Start every day with the top news stories right now, plus original features, a podcast, videos and more.<\/p>\n<\/div>\n<\/div>",
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        "rendered": "<p>In brief The World Federation of Exchanges urged the SEC to limit exemptions for crypto platforms. Tokenized stock products marketed [&hellip;]<\/p>",
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