SEC · CoinDesk
SEC's big swing to clear tokenization path isn't likely to get resilience of full rule
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The U.S. Securities and Exchange Commission is preparing one of the most consequential of Chairman Paul Atkins' crypto policies, a new approach that grants some regulatory leeway to those seeking to tokenize securities, such as company stocks.
Key facts
- A proper rulemaking "requires at least 12 to 18 months," said Patrick Daughtery, a former SEC lawyer who represents crypto interests at Foley & Lardner and recently joined the SEC's investor advisory
- Tokenization, the concept of turning traditional assets into tokens that can be transacted on blockchains, is where much of the crypto-world momentum is currently centered, and its advocates say
- In March, SEC Chairman Paul Atkins described the incoming policy as "an innovation exemption to facilitate limited trading of certain tokenized securities with an eye toward developing a long-term
- Under the federal securities laws, there's broad exemptive authority, almost for all the acts the commission has the ability to engage in," said Thoreau Bartmann, a lawyer at K&L Gates who served
Summary
The U.S. Securities and Exchange Commission's forthcoming "innovation exemption" for tokenization isn't expected to rate at the top of the agency's hierarchy of policy durability, despite the crypto sector's years-long wait to get U.S. rules set in stone. Former SEC lawyers say the agency's power to exempt activity from securities laws would still be difficult to reverse, though agency leaders have said this initial policy will be narrow and time-limited. The SEC has an option to pursue formal tokenization rulemaking, the closest it can get to carving something in stone, with a process that involves multiple rounds of public comment and revisions that incorporate that feedback.