A prominent traditional finance (TradFi) industry group has called on the U.S. Securities and Exchange Commission (SEC) to reject exemptions for crypto firms offering tokenized stocks, emphasizing that regulatory integrity must be preserved.
SIFMA Pushes Back Against Crypto Relief Requests
The Securities Industry and Financial Markets Association (SIFMA), which represents major banks, investment firms, and securities issuers, submitted a letter to the SEC on July 1 warning against granting no-action or exemptive relief to cryptocurrency firms. These regulatory tools would allow companies to circumvent traditional securities laws and launch tokenized equities more quickly.
“These policy questions are too important to be addressed through shortcuts,” SIFMA argued, urging the SEC to use a full notice-and-comment rulemaking process.
The group warned that bypassing standard procedures could undermine the investor protections embedded in the current federal securities framework.
SEC’s Crypto Task Force Weighs New Approaches
The pushback comes just weeks after SEC Commissioner Hester Peirce hinted that the agency is exploring exemptive relief for blockchain-based securities platforms. Peirce acknowledged that high costs and regulatory ambiguity discourage startups from launching tokenized securities, despite the technology’s promise.
She noted that “inapt regulations” from pre-blockchain eras are holding back innovation and proposed tailored exemptions as a potential solution.
TradFi Fears Disruption from Decentralized Equity Trading
Crypto industry observers argue that traditional finance players are primarily concerned with defending their dominance. Tokenized securities could unlock stock trading across more decentralized, global, and cost-effective platforms, threatening legacy systems.
“The old gods of finance do not share power lightly,” noted Alexander Grieve, VP of government affairs at venture firm Paradigm.
Some legal experts, however, sided with SIFMA’s procedural concerns, suggesting that changing how the public accesses securities should happen via public rulemaking, not through special exemptions granted to individual firms.
Crypto Firms Eyeing Stock Tokenization Despite Barriers
Despite regulatory uncertainty, crypto exchanges like Coinbase and Kraken are actively exploring tokenized equity offerings. Kraken recently launched a tokenized stock service, although users in the U.S., EU, and major markets are currently restricted due to compliance risks.
Coinbase’s legal team has also signaled that tokenized equities are a strategic priority—but are contingent on SEC approval.
The debate underscores a deeper conundrum: how to regulate assets that straddle both decentralized crypto systems and centralized financial frameworks.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.