SEC hits the emergency "brake"! Tokenized trading plan for US stocks suddenly postponed.

According to multiple sources, the U.S. Securities and Exchange Commission (SEC) has postponed a plan aimed at providing extensive exemptions for U.S. cryptocurrency companies to allow them to trade tokenized assets linked to stocks. Sources said that the SEC was originally planning to release the so-called "Innovation Exemption" as early as this week to promote tokenized stock trading, and the related draft has already been prepared and reviewed by staff. However, the timeline for this plan has been delayed as the SEC is weighing opinions from officials of stock exchanges and other market participants. These participants have been in discussions with SEC staff over the past few days to understand the details of the plan. One of the concerns raised is that the SEC plans to allow trading of so-called "third-party tokens," tokens whose issuance has not been endorsed or approved by the respective listed companies. As of now, the SEC has not made any modifications to its draft proposal. If the SEC decides to allow trading of third-party tokens, it will contradict expectations of some cryptocurrency market experts and trading firms. According to the SEC proposal, platforms offering token trading must ensure that investors have rights equivalent to common shareholders, including dividends and voting rights. However, several former regulators have expressed concerns as to how companies will technically fulfill these obligations given that tokens circulate on an anonymous blockchain network. Sources reveal that not all SEC officials support the decision to allow trading of third-party tokens. Paul Atkins, a longtime ally of SEC Chairman, Commissioner Hester Peirce, announced on Thursday that the expected "Innovation Exemption" would be "narrow in scope," only facilitating trades in digital representations that are the same as underlying equity securities currently available to investors in secondary markets. Former regulators and market experts have raised several concerns about the SEC's plan. Many individuals believe that listed companies may face uncertainties, such as how to maintain dividends and conduct shareholder voting operations when token rights spread on the blockchain. A Wall Street executive has reportedly raised this issue with stock exchange officials. "If I were a company executive, I would be very concerned about the impact it might have," said Amanda Fischer, a former senior SEC official during the Biden administration and current policy director at Better Markets. Another concern is that these tokens may fall into the hands of overseas criminals who exploit loopholes in blockchain technology to evade U.S. regulations. Cryptocurrency expert Austin Campbell, a former banker and current professor at New York University's Stern School of Business, warned that tokenized securities may end up on platforms that do not strictly adhere to "Know Your Customer" (KYC) policies. This raises the risk of overseas entities subject to U.S. sanctions holding these tokens through cryptocurrency platforms. "If you don't know who owns the tokens, you cannot distribute dividends," he said. "This opens up a Pandora's box." Joe Saluzzi, a partner at Themis Trading, a brokerage firm in Chatham, New Jersey, mentioned that he had asked several clients if they were interested in 24/7 trading of tokenized securities, but there was no interest shown. He said, "There is simply no demand for this type of trading in the market."