The U.S. Securities and Exchange Commission has reportedly delayed plans to introduce a proposed exemption for tokenized stock trading after exchanges and market participants raised concerns over investor protections and how blockchain-based ownership would function in practice.

According to a Bloomberg report published Friday, SEC staff had already reviewed a draft framework tied to the agency’s proposed “innovation exemption,” which was expected to be released earlier this week before discussions slowed.

People familiar with the matter told Bloomberg that feedback from stock exchange officials and other market participants centered on whether tokenized equities could preserve the same legal and economic rights attached to traditional shares. 

Questions were also raised over how ownership records would be verified on semi-pseudonymous blockchains and whether unauthorized firms could issue stock-linked tokens without approval from the underlying public companies.

Under the proposal reviewed by the SEC, platforms offering tokenized equities would need to ensure investors retain rights typically associated with common stock, including dividend access and shareholder voting privileges.

Earlier in the week, SEC Commissioner Hester Peirce had already signaled

 that any exemption under consideration would likely remain narrow in scope. 

In comments posted to X on Thursday, Peirce said she expected the framework to support only “digital representations” of equity securities that already trade in public secondary markets.

SEC discussions narrow focus to issuer-backed equities

At the same time, the latest delay has drawn support from several crypto industry executives who argued that the SEC should avoid rushing a framework for tokenized securities.

Carlos Domingo, the CEO of tokenization platform Securitize, wrote on X that regulators should ensure the exemption “applies to the right instruments,” adding that delaying the proposal would be preferable to introducing rules that create operational or legal problems.

Separately, Tom Farley, the CEO of crypto exchange Bullish, said on X that the SEC appeared to be recognizing that only public companies themselves should be permitted to issue blockchain-based versions of their shares.

Behind the discussions, the SEC has continued drawing a distinction between different forms of tokenized securities. In guidance released in January, the agency classified such products into “custodial” and “synthetic” categories.

Custodial tokenized securities are issuer-backed shares held through regulated intermediaries and provide investors with shareholder rights tied to the underlying stock. Synthetic tokenized securities, by contrast, only offer price exposure to equities without transferring ownership of the underlying shares.

Growing interest in tokenization from Wall Street firms and crypto companies has coincided with the SEC taking a more crypto-friendly stance under the Trump administration. Data from RWA.xyz shows that tokenized real-world assets have reached roughly $34 billion, including about $1.55 billion tied to tokenized equities.

Total RWA market value. Source: RWA.xyz

Despite that growth, adoption has remained below earlier industry projections. According to a McKinsey & Company report published in 2024 tokenization could grow into a multi-trillion-dollar market by the end of the decade.

Nasdaq has moved closer to offering cash-settled bitcoin BTC$77,338.29 index options, a move set to democratize crypto risk management and eliminate legacy operational barriers.

Last week, the U.S. Securities and Exchange Commission granted Nasdaq PHLX conditional approval to list European-style options under the ticker QBTC. These will be cash-settled, European-style options tracking the CME CF Bitcoin Real Time Index (BRTT).

Cash-settled means the options are settled in U.S. dollars. At expiration, the exchange credits or debits the cash difference between the strike price and the final index value and no actual bitcoin is delivered or received.

For the average market participant, the new product, still pending approval from the Commodity Futures Trading Commission (CFTC), removes operational friction. QBTC options will trade on the same Nasdaq platform as popular technology stocks, allowing participants to execute hedging strategies and bitcoin volatility bets directly through their existing brokerage accounts without needing a separate futures or derivatives account.

By contrast, CME’s bitcoin options, which have been available since 2020, are also cash-settled but track Bitcoin futures rather than the spot index. They also require a dedicated derivatives account, adding operational complexity.

The story doesn’t end there.

Each Nasdaq QBTC option contract delivers exposure equivalent to exactly 1 BTC, using a 1/100th index scaling factor with a standard $100 multiplier. By comparison, the CME’s standard Bitcoin option is sized at 5 BTC, often representing hundreds of thousands of dollars in notional exposure.

This much smaller contract size opens the door for precise hedging by smaller institutional managers and more affordable volatility trading for retail participants.

Options are derivative contracts that give the purchaser the right to buy or sell the underlying asset at a predetermined price on a later date. A call option gives the right to buy and represents a bullish bet, while a put offers protection against price slides.

Think of it like paying a small non-refundable deposit to lock in the right to buy/sell a house at today’s price anytime over the next few months. If property prices rise/fall, you can still purchase/sell at the pre-agreed price and benefit from the gain. If you change your mind, you simply walk away, losing only the initial deposit.

Crypto options, led by bitcoin contracts, have seen explosive growth in recent years, as institutionalization of the market triggered demand for sophisticated risk management and yield-enhancing strategies.

The U.S. Securities and Exchange Commission is delaying the rollout of an “innovation exemption” that would let platforms trade tokenized versions of U.S. stocks, according to people familiar with the matter. Bloomberg reported on May 22, 2026, that the agency has not yet decided to alter its proposed framework, despite broad feedback from market participants.

Under the draft rule, venues offering tokenized stocks would be required to guarantee holders the same rights as traditional shareholders—dividends and voting rights—raising questions about how to verify ownership and prevent unauthorized third-party issuers on semi-anonymous blockchains. The pause follows input from hundreds of market participants on the specifics of implementation.

Key takeaways

• The SEC reportedly postponed the “innovation exemption” for tokenized stocks; no final decision to change the proposal has been made.
• Any platform offering tokenized equities would be obliged to deliver real shareholder rights, prompting concerns about unauthorized issuers and on-chain ownership verification.
• Industry voices urged a careful approach, with prominent executives arguing that delays are prudent to ensure the exemption targets the right instruments.
• Public-token representations are viewed through two models: custodial tokens with full ownership rights and synthetic tokens that track price exposure without underlying ownership.
• Market data shows tokenization of real-world assets reaching $34 billion, including $1.55 billion in tokenized equities, though overall adoption has lagged earlier projections.

Deliberations amid a state of flux

The Bloomberg report underscores that the SEC’s innovation exemption—intended to govern crypto-based stock representations—remains under consideration, with a final decision still pending. The commission has reportedly received input from hundreds of market participants on how best to implement the rules, but officials have not committed to adjusting the proposal’s scope.

The core issue is straightforward in description but thorny in practice: ensuring tokenized shares carry the same rights as traditional stock, including the right to receive dividends and to vote. At the same time, regulators are wary of how ownership would be verified on blockchains that are at least semi-anonymous, and of the risk that third parties could issue tokens tied to public companies without authorization. The balance between protecting investors and enabling a new layer of market infrastructure remains delicate as the rulemaking unfolds.

Industry reaction and regulatory context

Industry participants have largely welcomed the SEC’s decision to pause and reassess. Carlos Domingo, CEO of Securitize, a leading tokenization platform, emphasized the importance of alignment between the exemption’s scope and the instruments it covers. In a post to X, he wrote that it is crucial the exemption applies to the right instruments, adding, “Better delay it than get it wrong and unleash all sort of problems.”

“Better delay it than get it wrong and unleash all sort of problems.”

The push to move carefully echoes broader tensions in the sector. Tom Farley, CEO of crypto exchange Bullish, summarized a similar sentiment on X, suggesting that the market needs to recognize that public companies remain the issuers of stock representations and praising the SEC for taking time to get it right.

These reactions come as the SEC’s approach to crypto-powered financial products has evolved since the Trump administration, a period that has coincided with a notable uptick in Wall Street interest in tokenization and related concepts such as stablecoins. The commission has signaled a willingness to explore regulated structures for digital assets, even as it exercises caution on premature or misaligned products.

The discussion around tokenized securities has also been colored by remarks from the agency’s commissioners. In particular, Commissioner Hester Peirce indicated that any exemption should be narrow in scope and would likely support “digital representations” of equity securities that resemble what investors already access in the secondary market. Her observations highlight the ongoing debate about how far tokenization can realistically extend into traditional equity markets without compromising investor protections.

Earlier this year, the SEC clarified that tokenized securities could take one of two forms: custodial tokens, where issuer-sponsored shares are held by regulated intermediaries with full shareholder rights, and synthetic tokens, which offer price exposure without granting actual ownership of the underlying shares. That distinction remains central to how the proposed exemption might operate in practice and to how the sector designs compliant products.

Tokenization progress and market expectations

Beyond the regulatory question, industry data paints a mixed picture of progress. RWA.xyz, a data service tracking tokenized real-world assets, reports that about $34 billion worth of such assets have been tokenized across various use cases, including roughly $1.55 billion in tokenized equities. While that suggests meaningful activity, the pace and scale have not matched some early forecasts. Banks and consulting firms previously projected tokenization could become a multi-trillion-dollar market by the end of the decade, with Citi and McKinsey among the forecast leaders; those projections have yet to materialize in the way some hoped.

The present pause, then, is not just a procedural hiccup but a test of whether tokenization can mature under a framework that preserves investor rights while preventing misissuance and governance confusion. The SEC’s willingness to solicit broad feedback and to delay action signals a methodical approach: even as market participants push for faster adoption, regulators appear intent on getting the architecture right before broader rollout.

Looking forward, observers will be watching for the SEC’s next moves on the exemption’s scope, the exact standards for custodial versus synthetic tokenized securities, and how platforms will verify ownership and consent from public companies involved. As the industry waits for a more definitive rule, the balance between innovation and protection remains the central theme shaping the trajectory of tokenized equities.

What remains uncertain is how quickly regulators will translate stakeholder input into a final framework that works in a live market. In the near term, the key questions are whether the exemption will cover a narrow set of instruments or broaden to a wider class of digital representations, and how issuers, platforms, and investors will navigate the practicalities of on-chain ownership, voting, and dividends. The next weeks and months will be instrumental in setting the tempo for tokenized equities and the broader tokenization push across asset classes.

Kalshi has backed a new advocacy group, Americans for Fair Markets, as the prediction market industry faces rising pressure from casinos, sportsbooks, state regulators, and Congress. 

The group launched with Taylor Budowich, a former deputy White House chief of staff, as strategic advisor.

Americans for Fair Markets plans to shape federal policy for prediction markets and federally regulated exchanges. Kalshi said the group will support paid and earned campaigns against what it called “false narratives about prediction markets” from sportsbook and casino interests.

The group also said it will support consumer rules for regulated platforms. Its stated priorities include know-your-customer checks, bans on insider trading, full CFTC funding, and limits on contracts tied to war, death, terrorism, and assassination.

Former Trump aide joins the policy push

Taylor Budowich’s role gives the group a direct link to Republican political circles. Budowich most recently served as deputy White House chief of staff under Susie Wiles, according to Kalshi’s announcement.

John Bivona, Kalshi’s head of government relations and an AFM board member, framed the launch as a response to powerful gaming interests. 

“We’re not going to be outspent or out-organized by entrenched interests protecting their monopolies,” he said.

Additionally, the launch came as the U.S. House Committee on Oversight and Government Reform opened an investigation into Kalshi and Polymarket. The committee asked both firms for records on user checks, geographic limits, and suspicious trading controls.

The probe follows concerns that users with non-public government information could profit from event contracts. Related reports also cited suspicious trades tied to geopolitical events and a case involving a U.S. Army master sergeant accused of using classified information to earn more than $409,000.

CFTC and states remain divided

Kalshi wants federally regulated prediction markets to remain under the Commodity Futures Trading Commission. State regulators argue that some event contracts, especially sports-linked markets, fall under local gambling laws.

As reported by crypto.news, that conflict widened after Kalshi and Polymarket lost emergency bids in Nevada and Washington. A Ninth Circuit panel ruled that a federal derivatives defense does not automatically move state gambling cases into federal court.

Prediction markets expand beyond retail trading

Related reports show Kalshi has also been moving toward larger financial use cases. Bernstein pointed to Kalshi’s first bespoke block trade as a step toward institutional event-risk trading, while Clear Street added a regulated access route for larger clients.

Kalshi has also appeared in reports about crypto perpetual futures and media data deals. Earlier coverage noted that Fox would stream Kalshi’s real-time probabilities across Fox News, Fox Business, Fox Weather, and Fox One after similar integrations with CNN and CNBC.

Kalshi has backed a new lobbying group for prediction markets called Americans for Fair Markets, which has tapped former deputy White House chief of staff Taylor Budowich as its strategic advisor.

Kalshi said on Friday that the organization is positioning itself against sportsbooks and casinos, which it claims are “focused on protecting their monopolies and seeding lies about prediction markets to policymakers.”

Americans for Fair Markets, which Kalshi said was launched with its support, would join a broader lobbying push that includes the Coalition for Prediction Markets, an advocacy group for prediction markets launched in December 2025, backed by Coinbase, Crypto.com, and Robinhood.

Kalshi said the organization aims to shape federal policy on prediction markets and would run paid campaigns on what it claimed were “false narratives about prediction markets.”

The launch of the group came on the same day that the US House launched a probe into Kalshi and its main rival, Polymarket, over how the companies were handling insider trading, as prediction markets come under increased scrutiny in the US and abroad. 

Budowich’s appointment as an advisor comes as US President Donald Trump has expressed mixed takes on prediction markets. Trump said last month that he was “not happy” with prediction markets over well-timed Iran war bets.

However, Trump, whose son Donald Trump Jr. invested in Polymarket and joined the company’s advisory board and is an adviser to Kalshi, softened his stance days later, saying the US would “get left out in the cold” if it didn’t allow the platforms.

Kalshi said that Americans for Fair Markets will support the Commodity Futures Trading Commission in regulating prediction markets. 

The CFTC and state regulators have faced off over competing claims for jurisdiction, with states claiming prediction markets are violating local gambling laws, while the CFTC has claimed sole jurisdiction over the platforms.

Related: Kalshi valuation doubles to $22B after $1B funding round

Americans for Fair Markets said it would also focus on backing federally regulated platforms with consumer protections such as know-your-customer requirements, insider trading bans and restrictions on markets tied to violence or terrorism.

“We’re not going to be outspent or out-organized by entrenched interests protecting their monopolies,” John Bivona, Kalshi’s head of government relations who was appointed as a board member for the new lobby group. 

“Millions of Americans have shown they want regulated, open, and fair prediction markets — and we’re going to make sure they have access to them,” he added.

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