SEC Pushes Back Tokenized Stock Exemption, Bitcoin Sheds $33.8B in Value

Bitcoin and major cryptocurrencies sold off sharply Friday evening after reports that the U.S. Securities and Exchange Commission has delayed work on a proposed "innovation exemption" that could have enabled wider trading of tokenized equities. Bitcoin slid to about $75,834, wiping roughly $33.8 billion from its market value. Ethereum fell to around $2,000, losing about $8.58 billion in market capitalization. Bloomberg reported that SEC staff had been preparing an exemption framework that would allow crypto platforms to offer tokenized versions of publicly traded stocks, potentially as soon as this week. While a draft was said to be ready and reviewed internally, the agency is slowing the timeline as it considers feedback from stock exchange officials who have recently discussed the plan with SEC personnel. A central point of contention is whether the exemption would permit so-called third-party tokens—digital representations of shares issued without the backing or explicit approval of the underlying public companies. The SEC has not announced formal changes to the draft, but the delay and lingering uncertainty contributed to the market reaction. Under the proposal, platforms offering tokenized equities would be expected to ensure token holders receive the same rights as traditional shareholders, including voting and dividend entitlements. Former regulators and market experts say enforcing those rights could be difficult once tokens move across pseudonymous blockchains instead of through conventional shareholder registries. The discussion is also exposing internal differences at the SEC. Commissioner Hester Peirce said on X that she expects the exemption to be "limited in scope," and argued it should apply only to digital representations of the exact equity securities already tradable in secondary markets. Compliance and security concerns are also in focus. Officials and market observers have warned that certain token structures could be exploited by overseas bad actors and used to take advantage of gaps in cross-border oversight of blockchain-based trading. The SEC continues to gather feedback from exchanges and other stakeholders. The final design of any innovation exemption—particularly how shareholder rights would be enforced and how regulatory arbitrage would be prevented—is expected to shape whether tokenized equities can scale in the U.S. and how markets respond when the agency makes its decision.