SEC's innovation exemption aims to clear tokenization path

The U.S. Securities and Exchange Commission under Chairman Paul Atkins is preparing an "innovation exemption" to allow limited tokenization of securities, offering regulatory leeway rather than permanent rulemaking. The policy would let some assets be put on blockchains as a proving ground, but it is not the durable framework the crypto industry has been seeking.

Commissioner Hester Peirce said, "It doesn't have to be done as a rulemaking... We can do it as a rule, but we don't have to do it as a rule." Former SEC lawyers note that commission-granted exemptions carry more weight than staff statements and would be difficult to reverse, even if they lack the permanence of formal rules.

"The end goal is ultimately a statute or rule that provides certainty," said Charles Riely. "The question is whether the innovation exemption can be a step toward that." A full rulemaking requires months of notice-and-comment and typically takes "at least 12 to 18 months," former SEC lawyer Patrick Daughtery said.

United States

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