SEC Faces Pushback on Tokenized Stock Exemptions as Exchanges Warn of Market Risks

The SEC's review of crypto exemptions for tokenized stocks has sparked a clash between innovation advocates and traditional exchanges. The World Federation of Exchanges (WFE) warned that unregulated trading could destabilize markets, urging the agency to maintain strict oversight despite calls for lighter rules from Commissioner Paul Atkins.

Tokenized equities—already live on some offshore platforms—now face scrutiny over whether they undermine fair competition. The WFE argues these products often operate outside existing governance frameworks, creating operational risks. Meanwhile, Atkins champions a regulatory sandbox approach to position the U.S. as a leader in digital asset innovation.

The debate hinges on whether blockchain-based securities require new rules or simply fit within existing structures. Exchanges demand proof-of-concept testing before full rollout, while crypto firms push for faster adoption through exemptions.