Tokenization-linked stocks have fallen as much as 11.2% after legal and market concerns reportedly delayed the SEC’s planned innovation exemption for blockchain-based securities.

According to fresh reports on Friday, the Securities and Exchange Commission was preparing to delay its innovation exemption again after the White House and Wall Street firms raised concerns about its legal basis and possible effect on securities markets.

The exemption was expected to reduce regulatory barriers for companies issuing and trading tokenized securities on blockchain networks. SEC officials were reportedly ready to disclose at least part of the plan alongside a separate meeting on Regulation Crypto before the agency canceled the session late Thursday.

According to reports, White House officials were concerned that the exemption could complicate congressional negotiations over the Digital Asset Market Clarity Act. SEC staff were also examining whether the agency had sufficient legal authority, economic analysis, and procedural support to grant relief covering major changes to securities trading.

The Securities Industry and Financial Markets Association, whose members include large broker-dealers and investment banks, had raised separate concerns, the report said. SIFMA questioned how blockchain venues would comply with existing equity-market rules, including brokers’ duty to seek the best available execution for customers.

Tokenization stocks extend their Friday losses

Bullish (BLSH) led the selloff, falling 11.2% to $24.42 by about 2:32 p.m. ET on Friday. The stock opened at $26.57 and reached an intraday low of $24.36, erasing gains recorded after the company released its second-quarter results.

Bullish is expanding into tokenized securities infrastructure through its planned acquisition of transfer agent Equiniti. Transfer agents maintain ownership records and process transactions such as share issuance, transfers, and dividend payments, making the business relevant to companies that want to represent regulated securities on blockchain networks.

Figure Technology Solutions (FIGR) traded 1.2% lower at $31.51 after moving between $30.65 and $33.04 during Friday’s session. Based on market data, the latest price was about 6.7% below Thursday’s session high of $33.78, although the stock had recovered from the steeper decline cited earlier in the day.

Coinbase (COIN) dropped 3% to $149.30, extending its decline from roughly 2% in early trading. The exchange has been developing a tokenized equities product and recently secured regulatory permission to establish an international tokenization hub in Abu Dhabi.

Circle Internet Group (CRCL) fell 4.8% to $71.79, after trading as low as $71.20. In addition to issuing the USDC stablecoin, Circle operates USYC, a tokenized money-market fund with approximately $3 billion in assets.

Securitize (SECZ) was down 1% at $5.65 after recovering from a Friday low of $5.17. Its shares had plunged about 27% during Thursday’s session after the company missed earnings estimates, though they briefly reversed a 5% decline early Friday.

Securitize reported second-quarter revenue of $14.4 million, down 5% from the previous year, and a net loss of $21.7 million. The company works with BlackRock on BUIDL, a tokenized Treasury fund, and serves as the transfer agent and tokenization platform supporting the product.

SEC exemption faces another regulatory delay

Market participants have been waiting for the innovation exemption to clarify how approved companies could issue and trade tokenized securities under temporary relief from parts of the existing regulatory framework.

SEC Chair Paul Atkins previously said a proposed structure could allow issuers to work with transfer agents or other tokenization providers before making securities available through approved blockchain venues. Investors would pass through a permitting process, while the temporary exemption would give the agency time to consider permanent rules.

Legal and ownership questions had already delayed the project once. In May, crypto.news covered an earlier delay after exchange officials and other market participants questioned whether third parties should be allowed to issue stock-linked tokens without consent from the underlying public company.

Part of the debate involves the difference between issuer-backed securities and synthetic products. An issuer-backed token can represent ownership of an actual share and preserve rights such as dividends and voting. A synthetic token may track a stock’s price without giving its holder ownership of the underlying security.

Securitize CEO Carlos Domingo supported taking more time when the earlier delay emerged, saying regulators needed to ensure the exemption applied to the correct instruments. Bullish CEO Tom Farley also backed an issuer-led model under which public companies would control the issuance of blockchain-based versions of their shares.

Friday’s reported setback introduces additional questions about procedure. Industry sources said that Wall Street firms wanted changes of this size handled through formal notice-and-comment rulemaking instead of an exemption, which could expose the agency to legal challenges over the limits of its statutory authority.

Canceled SEC meeting adds to policy uncertainty

Separate from the tokenization exemption, the SEC canceled its Aug. 14 meeting on a proposed offering framework for certain investment contracts involving crypto assets.

The agency said an unforeseen scheduling issue forced the cancellation and did not announce a replacement date. Commissioners had been scheduled to decide whether to publish the Regulation Crypto proposal, which would have opened a public rulemaking process rather than immediately creating binding requirements.

Federal regulatory records still list the SEC’s crypto-assets proposal, identified as RIN 3235-AN38, as pending review. The Office of Information and Regulatory Affairs received it on Aug. 12, and the proposal has no statutory deadline.

Atkins has previously described three possible routes under Regulation Crypto: a temporary exemption for startups, a separate fundraising exemption, and a safe harbor for investment contracts. Illustrative figures provided by the SEC chair included a startup exemption lasting as long as four years with a limit of about $5 million, along with another route allowing projects to raise as much as $75 million over 12 months.

No published proposal has confirmed those periods or financial thresholds. If commissioners later approve the document for publication, the SEC would still need to collect public comments before considering final rules.

The delay has also brought congressional action back into focus. Senate Majority Leader John Thune filed cloture on the motion to proceed with the CLARITY Act on Aug. 7, but the Senate adjourned without voting on the bill. The procedural vote is scheduled to ripen on Sept. 15 after lawmakers return.

Tokenization infrastructure continues developing

Regulatory delays have not stopped traditional exchanges and crypto companies from building systems for blockchain-based securities.

NYSE has continued work on onchain settlement infrastructure designed to support round-the-clock trading, immediate settlement, fractional shares, and stablecoin funding. The exchange also participated in a Depository Trust Company pilot that processed production transactions across several asset classes.

Nasdaq received SEC approval in March for a pilot that allows tokenized stocks to trade alongside conventional securities. NYSE is working with Securitize on a separate marketplace for tokenized stocks and exchange-traded funds.

Coinbase and its Base network have also been developing 1:1-backed tokenized equities intended to represent ownership of underlying shares. Coinbase has said its model would include dividend payments and shareholder rights, although the company has not provided a launch date or a final list of supported stocks.

Outside the United States, Coinbase’s Abu Dhabi authorization allows it to arrange investment transactions and provide custody for tokenized securities within the Abu Dhabi Global Market. The company says eligible holders will retain shareholder rights, including dividends and voting, while transfers will remain subject to sanctions screening.

Crypto.com launched tokenized derivatives tracking 1,500 U.S. stocks and ETFs for eligible customers in the European Economic Area and other approved markets in August. According to the exchange, the instruments offer synthetic price exposure rather than ownership of the underlying shares, meaning holders do not receive voting rights or direct legal ownership.

Nigel Farage has returned to the UK Parliament with 63.34% of the Clacton by-election vote, restarting an investigation into a $6.7 million gift and other support from two crypto-linked figures.

The UK Parliament’s Parliamentary Commissioner for Standards listed Farage on Friday as the subject of an investigation into a possible “failure to register an interest,” with the case reopening after his return as Clacton’s Member of Parliament.

Farage resigned from his seat in July while the inquiry was active, causing the commissioner to pause the case because parliamentary standards investigations apply to sitting MPs. His victory in Thursday’s by-election has restored his status as an MP and allowed the inquiry, first opened on May 13, to continue.

Nigel Farage probe covers gifts from two crypto-linked figures

Parliamentary officials are examining a £5 million about $6.7 million personal payment that Farage received from Christopher Harborne, a billionaire investor who holds a stake in stablecoin issuer Tether. Based on the exchange rate used in earlier reports, the payment was worth about $6.7 million.

Harborne gave Farage the money before the Reform UK leader entered Parliament following the July 2024 general election. Farage initially described it as a “reward” for his work campaigning for Brexit before later calling it an unconditional personal gift.

During a livestream announcing his resignation in July, Farage said he had “done nothing wrong.” He maintained that Harborne provided the money without political conditions and said part of it covered personal security costs following threats against him.

The inquiry also covers staff, security, transport, and accommodation reportedly supplied by longtime Farage adviser George Cottrell. In July, crypto.news reported on the benefits after The Sunday Times said Cottrell had funded drivers, security workers, social media personnel, and access to a rented five-story property near Buckingham Palace.

Farage responded that he had “followed the rules” because he received the benefits before becoming an MP. He also called the newspaper’s investigation a “hit job,” while a Reform UK source said Farage generally lived at his own home and did not regularly use the London property.

According to the newspaper, Farage registered one benefit linked to Cottrell after entering Parliament: travel, accommodation, and security valued at less than £9,300 for an event in Belgium. Much of the other reported support was not listed in the register of members’ financial interests.

Reelection has started a new disclosure period

House of Commons rules require newly elected MPs to register their current financial interests within one month. Members must also report registrable benefits, apart from earnings, that they received during the 12 months before their election.

Farage’s new term therefore creates another registration period covering the year before Thursday’s vote. The commissioner will determine whether the Harborne payment or the benefits linked to Cottrell fall within the disclosure rules and whether Farage complied with them.

A finding against Farage would not automatically remove him from Parliament. Under UK recall rules, a House of Commons suspension lasting at least 10 sitting days, or 14 calendar days when sitting days are not specified, can open a recall petition.

Voters would then have six weeks to sign the petition. According to the UK Electoral Commission, the seat becomes vacant, and a by-election follows only if at least 10% of eligible Clacton voters support the recall. A recalled MP can stand again.

Farage secured 22,239 votes, or 63.34%, in Thursday’s contest, while satirical candidate Count Binface finished second with 9,455 votes, or 26.93%. Turnout reached 44.4%, compared with 58.7% in the constituency during the 2024 general election.

Labour, the Conservatives, the Liberal Democrats, and the Green Party did not field candidates. Keir Starmer, who was prime minister when Farage resigned, described the by-election as a “desperate stunt,” while the ballot attracted 34 independent, minor-party, and novelty candidates.

Crypto donors have increased Reform UK’s funding

Scrutiny of Farage’s personal finances has accompanied a rise in donations to Reform UK from people connected to the digital asset industry. In June, previous coverage showed that the party raised $9.4 million from Harborne and BitMEX co-founder Ben Delo during the first quarter of 2026.

The two donors supplied about 28% of the $32.2 million received by all registered UK political parties during the quarter. Harborne gave Reform UK $4 million in January after contributing $12.1 million in 2025, while Delo provided $5.4 million through two payments.

Reform UK reported $12.5 million in total first-quarter donations, compared with $8.1 million for the Conservative Party and $5.5 million for Labour. Farage’s party had also become the first Westminster party to accept Bitcoin donations before the government restricted political contributions made with digital assets.

Neither Harborne’s £5 million personal payment to Farage nor the reported benefits from Cottrell were described as cryptocurrency transfers. Their relevance to the crypto sector comes from the donors’ business and investment connections rather than the payment method used.

Cottrell’s history also provides a direct U.S. connection. U.S. authorities arrested him in 2016 on 21 charges related to an alleged money-laundering scheme, according to The Sunday Times. He later pleaded guilty to one wire fraud charge under an agreement and served eight months in prison.

U.S. federal rules take a different approach to political cryptocurrency contributions. Federal Election Commission guidance permits political committees to receive Bitcoin, but campaigns must record it as an in-kind contribution and comply with contribution limits, donor eligibility rules, and disclosure requirements.

UK lawmakers seek permanent crypto donation restrictions

Political concern about digital asset funding has continued outside the Farage investigation. The UK introduced a temporary moratorium in March after lawmakers and a government-commissioned review raised concerns about tracing the source of political crypto contributions and identifying possible foreign influence.

In July, Labour MPs proposed a permanent ban through amendments to political donation rules. Labour MP Liam Byrne said the proposed restrictions were intended to strengthen protections against political influence funded by wealthy donors.

Earlier recommendations from Matt Western, chair of Parliament’s Joint Committee on the National Security Strategy, called for political parties to process permitted crypto donations through Financial Conduct Authority-registered service providers. His proposals also included source-of-wealth checks, a ban on mixer-linked funds, and conversion of accepted cryptocurrency into pounds within 48 hours.

The International Bar Association has identified separate gaps that extend beyond cryptocurrency. Under UK political finance law, donations and loans above £500 must come from permitted sources, including registered voters, UK companies, and eligible unincorporated associations.

According to the association, an unincorporated group may give as much as £37,270 to a political party without registering with the Electoral Commission. Individuals or companies can fund such groups, allowing foreign or otherwise prohibited donors to use them as conduits for political money.

Ireland has introduced its first national anti-money laundering strategy through 2030, placing enhanced checks on private-wallet transfers and overseas crypto firms among its main digital-asset controls.

Ireland’s crypto strategy increases transfer checks

Ireland’s Department of Finance said on Thursday that the national AML strategy will coordinate the country’s response to money laundering, terrorist financing, and proliferation financing until 2030.

For crypto firms, the plan completes Ireland’s implementation of the remaining provisions under the European Union’s Transfer of Funds Regulation. The measures require crypto-asset service providers to conduct enhanced checks on transfers involving self-hosted wallets and apply stricter due diligence when working with crypto businesses based outside the EU.

Under the regulation, information about a transfer’s originator and beneficiary must accompany the transaction when a regulated provider is involved. Required details can include names, distributed-ledger addresses, crypto account numbers, and unique transaction identifiers.

BNB Chain has scheduled its Pasteur hard fork for Aug. 25, introducing three changes intended to strengthen cross-chain transfers, tighten validator controls, and raise tested transaction capacity from 1,237 to 2,324 transactions per second.

BNB Chain said in an Aug. 14 announcement that Pasteur will go live on BNB Smart Chain at 2:30 a.m. UTC on Aug. 25 after running on its test network since July 21.

Node operators must install BSC software version v1.7.7 before the activation time. The network also instructed operators to remove an outdated setting called EnableBAL from their configuration files because the updated software will not start if it remains in place.

Pasteur includes three proposals: BEP-682, BEP-695, and BEP-675. The first two address security and validator permissions, while the third changes how transactions are processed when new blocks are prepared.

Pasteur will strengthen BNB Chain bridge checks

BEP-682 changes how BNB Smart Chain confirms transfers arriving from another blockchain. Before accepting the assets, BSC checks whether enough validators from the sending network have approved the transfer.

BNB Chain said the current process does not prevent the same validator from appearing several times in the approval list. A carefully prepared request could therefore count one validator’s approval more than once, allowing a transfer to pass with fewer separate approvals than the rules require.

Pasteur will reject repeated validator entries. According to the network, cross-chain transfers will then need approval from the proper number of separate validators before BSC accepts them.

The proposal addresses a specific weakness in BNB Chain’s transfer checks, although the network did not say the issue had been used to steal funds.

Cross-chain security has received added attention after attacks on several third-party bridges. In July, a Cardano-to-BNB Chain bridge operated by Wanchain reportedly lost about 515 million NIGHT tokens, valued at roughly $9 million at the time.

Security firm BlockSec said the reported attack may have involved a weakness in the messages sent to validators for approval. Midnight Foundation later said the incident affected Wanchain’s third-party bridge and did not involve the Midnight Network itself.

Separately, crypto.news reported in August that cross-chain bridge attacks had caused more than $4 billion in losses since 2021. The report identified stolen validator keys and poor transfer checks as among the weaknesses used in major incidents.

BNB Chain has not connected Pasteur to the Wanchain attack or any other recent exploit. Its announcement presents BEP-682 as a direct correction to the approval system used for transfers entering BSC.

Old validator keys will lose access

A second proposal, BEP-695, changes what happens when validators replace the digital keys they use to manage their duties on the network.

Changing keys is a routine security measure, but BNB Chain said an old key could continue to hold management rights after its replacement. Pasteur will remove those rights once a validator starts using a new key.

Pending penalties will also remain attached to the validator after a key change. According to the network, a validator facing removal for breaking network rules will no longer be able to avoid the process simply by replacing its key.

The same proposal closes a separate gap in BSC governance. Blacklisted addresses are already prevented from voting directly, but BNB Chain said they could still take part by signing a vote away from the blockchain and asking another account to submit it.

After Pasteur, the restriction will also cover votes submitted through signed messages. BNB Chain said the change will prevent blacklisted addresses from using an indirect route to participate in governance decisions.

Network operators have faced similar update requirements during earlier BSC upgrades. Before the Osaka/Mendel hard fork in April, BNB Chain issued a mandatory software notice telling operators to install version v1.7.2 and remove old settings to prevent their nodes from falling out of sync.

Osaka/Mendel introduced nine network proposals covering transaction limits, stability, and the process used to confirm transactions. The upgrade followed Fermi, which reduced BSC’s block time to 0.45 seconds in January.

Pasteur will keep that block time unchanged. Instead of making blocks arrive faster, the latest upgrade is designed to place more transactions inside each one.

Internal tests raised capacity to 2,324 TPS

BNB Chain said block builders and validators currently repeat some of the same work when preparing a block of transactions.

A builder first processes the transactions and sends the completed block to a validator. The validator then processes the same transactions again before approving the block, leaving less time to add as many transactions as the network can support.

BEP-675 will allow a builder to send a block that it has already processed. The validator can check that the block follows network rules, approve it, and complete a deeper review afterward.

During tests on QANet, an internal environment designed to resemble BSC’s main network, the time validators spent on the immediate check fell from 125 milliseconds to 15 milliseconds.

Transaction capacity rose from 1,237 TPS to 2,324 TPS while the block time remained at 450 milliseconds. BNB Chain also kept the maximum amount of computing work allowed in each block unchanged during the test.

Average use of each block’s available capacity increased from 46.35% to 84.15%. According to the network, the test suggests BSC could handle busier periods by using more of the space already available rather than increasing block speed.

BNB Chain cautioned that the figures came from controlled tests and do not represent confirmed results on the live network. The new block-building method will not begin automatically when Pasteur activates because builders will receive additional time to prepare their systems.

Regular users and most application developers will not need to take any action. Node operators and block builders are the groups responsible for completing the software changes.

U.S. investors have exposure through a listed BNB fund

The upgrade also has relevance for American investors who hold BNB through a regulated investment product. Securities and Exchange Commission records show that shares of the VanEck BNB ETF are registered for trading on Nasdaq under the ticker VBNB.

The fund’s registration statement became effective on May 27. Its stated purpose is to track the price of BNB, minus the fund’s operating expenses.

According to an Aug. 7 SEC filing, VanEck Digital Assets appointed BitGo Bank & Trust as a second company responsible for safeguarding the fund’s BNB holdings. BitGo is a nationally chartered bank supervised by the Office of the Comptroller of the Currency.

The agreement allows BitGo to hold BNB for the fund and process deposits or withdrawals between the fund’s account and public blockchain addresses. VanEck’s filing states that the fund retains ownership of the tokens and that BitGo must keep them separate from assets belonging to its other customers.

BitGo cannot lend, pledge, or reuse the BNB unless the fund gives permission or the law requires it. The custody agreement was signed on Aug. 5 and disclosed to the SEC two days later.

Binance Research says Gen Z traders on the exchange are steadily shifting a larger share of their equity-related activity toward exchange-traded funds (ETFs), while direct stock trading is taking up less of the cohort’s overall flow. The trend stands out across Binance’s coverage of direct equities, tokenized stocks, and traditional finance perpetuals.

In early August, Binance Research reported that ETFs made up 25% of Gen Z trading volume within its analysis group. The same study found that ETFs accounted for 21.9% of Gen Z net equity inflows in July, up from 18.5% in June, as the share routed to individual stocks fell to 74.2% from 77%.

Key takeaways

• ETF demand is rising: Gen Z’s ETF share of trading volume reached 25% in early August, and ETF net inflows climbed to 21.9% in July.
• Direct stocks lose share: the portion of Gen Z net equity inflows going to individual stocks dropped to 74.2% from 77%.
• Gen Z trades less often: in TradFi perpetuals, Gen Z averaged 13 monthly trades versus 17 for Millennials and 16.5 for Gen X.
• Fewer sell orders among Gen Z: 22% of Gen Z direct-equity accounts had never placed a sell order, compared with 19% for Gen X and 9% for Baby Boomers.
• Limited appetite for leverage: 88.2% of Gen Z TradFi perpetual accounts recorded no activity in leveraged or inverse ETFs.

Gen Z’s ETF shift: what the Binance Research data shows

The Binance Research analysis compared Gen Z accounts with older working-age generations (Millennials, Gen X, and Baby Boomers) across several measures, including trading frequency, net inflows, and the use of leverage. The study looks at activity spanning direct equities, tokenized stocks, and traditional finance perpetuals.

Within that framework, the ETF share of Gen Z activity increased in a stepwise pattern. Binance Research pointed to July as a key month: ETF net inflows for Gen Z rose to 21.9%, up from 18.5% in June. Over the same period, the allocation to individual stocks declined, falling to 74.2% from 77%.

While the figures describe allocation, they also hint at how younger participants may be approaching equity exposure on exchange venues that offer both spot-like instruments and ETF wrappers. For investors, that matters because a growing preference for ETFs can mean broader diversification and potentially different risk profiles compared with concentrated single-stock positioning.

Trading behavior differences: frequency, “buy-only” accounts, and leverage use

Binance Research also reported behavioral differences in how often Gen Z engages with these products. Across all three categories examined, Gen Z traded less frequently than other working-age cohorts. In TradFi perpetuals, Gen Z averaged 13 monthly trades—below Millennials at 17 and Gen X at 16.5.

The study further found a notable skew in sell-order behavior among younger users. For Gen Z direct-equity accounts, 22% had never placed a sell order. By comparison, 19% of Gen X accounts and 9% of Baby Boomer accounts showed the same “buy-only” pattern. Millennials, meanwhile, had the highest share of buy-only accounts at 30%.

Among the Gen Z buy-only accounts, Binance Research cited cumulative purchases that included Broadcom and Tesla, as well as the Schwab US Dividend Equity ETF—suggesting that even when participants primarily buy, their preference can extend to ETF exposure rather than only individual stocks.

On leverage, Gen Z also appeared more cautious in Binance Research’s view. The share of Gen Z TradFi perpetual accounts with no activity in leveraged and inverse ETFs was 88.2%. That compares with 84.5% for Millennials and 85.9% for Gen X.

Tokenized stocks: bStocks briefly passes xStocks as the market keeps expanding

Separately from the generational ETF flow data, Binance-related tokenized equities saw a brief ranking change this week. Binance’s bStocks temporarily overtook Kraken’s xStocks as the second-largest tokenized stock issuer, according to Token Terminal.

As of Tuesday, Token Terminal data showed bStocks at $610.6 million in tokenized stock value, versus xStocks at $601.2 million. By Friday, the positions reversed: xStocks were at $610.7 million while bStocks stood at $579.6 million. In that snapshot, xStocks represented 22.3% of the roughly $2.7 billion tokenized stock market, while bStocks accounted for 21.2%.

Ondo Finance remained the largest issuer in that period, with $971.8 million in tokenized stock value. Token Terminal also tracked broader growth across the sector, with RWA.xyz reporting distributed value for its tokenized stocks page at $2.43 billion as of Friday—about 5% higher over the previous 30 days.

For market observers, the rapid flip between bStocks and xStocks underscores how quickly tokenized equity rankings can change in a still-expanding segment—especially when issuance is relatively concentrated among a few providers. It also reinforces why investors tracking tokenized assets often monitor issuer shares as a proxy for where capital is flowing within the broader regulated-assets trend.

What to watch next: early-stage data limits and evolving allocation

Binance Research cautioned that its direct-equities product only reached meaningful scale in June, creating a relatively short window to draw longer-term conclusions. Even so, the direction of travel—more ETF allocation among Gen Z and reduced share for individual stocks in inflows—offers a signal worth monitoring as the data window expands.

Investors and traders should watch whether the ETF share in Gen Z activity continues to rise beyond early August and whether tokenized stock issuance rankings stabilize or remain volatile as additional capital enters the market.