SEC to Roll Out "Innovation Exemption" for Tokenized Assets in Coming Weeks

The U.S. House Financial Services Committee convened a hearing titled "The Future of Tokenization and Securities: Modernizing Capital Markets," according to The Block. The U.S. Securities and Exchange Commission is preparing to introduce an "innovation exemption" framework for tokenized assets in the coming weeks, a move that could serve as a regulatory sandbox for onchain products. SEC Chair Paul Atkins said the agency plans to solicit public feedback on key questions that could shape future rulemaking. The SEC has already signed off on several tokenization-related initiatives. In December last year, it authorized the Depository Trust & Clearing Corporation (DTCC) to tokenize certain high-liquidity assets on a preapproved blockchain. The New York Stock Exchange (NYSE) has announced plans to build a platform for tokenized securities trading and onchain settlement. Nasdaq also secured SEC approval for rule changes designed to support tokenized stock trading. Some lawmakers raised concerns during the hearing. Rep. Brad Sherman warned the exemption could lead to a "two-tier market," enabling blockchain-based tokenized securities to sidestep core securities rules. Rep. Maxine Waters, pointing to lessons from the 2008 financial crisis, questioned whether tokenization would meaningfully benefit investors or mainly serve "intermediaries," and flagged potential conflicts of interest tied to Trump's cryptocurrency holdings.