The CFTC has ordered Kalshi to continue operating under federal rules as a Washington judge restricted seven contract categories and set two geofencing deadlines for the prediction market.

The Commodity Futures Trading Commission said on Aug. 11 that it had used its emergency authority after Kalshi notified the agency of a market emergency tied to New York Attorney General Letitia James’ lawsuit against the exchange.

Under the CFTC emergency order, Kalshi must continue operating in line with the Commodity Exchange Act’s Core Principles. The agency issued the directive after New York asked a state court to halt the company’s event contracts and sought more than $36 billion in damages.

Although the federal action arose from the New York case, the order has entered the legal fight over whether states can restrict products offered by a CFTC-registered exchange. The agency’s Office of the General Counsel submitted the directive as supplemental authority to U.S. District Judge Lorna Schofield in the Southern District of New York, where the federal government is challenging New York’s enforcement position.

Sports betting lawyer Daniel Wallach described the directive as compelling Kalshi to defy state court orders. The CFTC’s public statement did not use that wording, saying instead that Kalshi must continue operating under the federal law governing designated contract markets.

Why the CFTC has ordered Kalshi to continue operating

New York filed its state action on July 31 and requested a temporary restraining order that, according to the CFTC, could stop Kalshi from offering all event contracts nationwide. The federal regulator said Kalshi notified it that such an order would create a market emergency.

New York’s complaint alleges that Kalshi operates an unlicensed gambling business and offers sports and other event-based products without approval from the New York State Gaming Commission. The state also claims the platform allows some users younger than New York’s legal sports betting age of 21 to trade the contracts.

As crypto.news reported in July, Attorney General James and Gov. Kathy Hochul are seeking at least $36 billion in restitution for affected users, disgorgement of alleged gains, and penalties tied to unauthorized sports wagering offers. Kalshi disputes the gambling classification and argues that its CFTC registration places the exchange under exclusive federal oversight.

In a related federal case, Kalshi has asked the Southern District of New York to pause proceedings until the Second Circuit Court of Appeals rules on its appeal. The company said the defendants did not oppose delaying discovery while the motion remains unresolved.

Wallach said New York could respond to the CFTC filing by challenging the federal government’s account of the dispute. According to the lawyer, state officials could raise an “unclean hands” argument or seek a temporary restraining order or preliminary injunction against the commission.

Washington gives Kalshi two geofencing deadlines

While the New York proceedings continue, King County Superior Court Judge John McHale has issued a preliminary injunction limiting Kalshi’s business in Washington.

The final terms require the company to stop offering, accepting, or facilitating contracts involving sports, elections, politics, entertainment, culture, technology, science, and mentions of specified events. Kalshi must also stop advertising and promoting the restricted products to Washington residents.

Under the order, an initial system based on users’ IP addresses and stated residency must be active by Aug. 19. Kalshi then has until Sept. 2 to install a multi-source geofencing system designed to identify and block users in the state more accurately.

Missing the Sept. 2 deadline could expose Kalshi to a penalty of $120,000 per day, according to reports on the order. The company may file an affidavit explaining any delay, leaving the court to determine whether the penalty should apply.

McHale did not bar every product on the platform. Washington residents may continue accessing contracts tied to commodities, climate, economics, and finance, categories that the court left outside the preliminary restrictions.

The judge had initially blocked Kalshi in July after finding that Washington was likely to succeed on claims that parts of the company’s business violated the state Gambling Act. McHale also found that potential harm to consumers and the public interest supported temporary limits while the lawsuit proceeds.

Kalshi’s request to stay the preliminary injunction during an appeal was denied. Wallach said the company could now ask the Washington Court of Appeals for similar relief.

Washington argues federal registration does not override state law

Washington Attorney General Nick Brown sued Kalshi in March, alleging that the platform offered and promoted unlicensed betting products to people in the state. His office has maintained that calling the products event contracts does not remove them from state gambling rules.

After the court issued the final injunction terms, Brown said Kalshi had profited from wagers covering sports, elections, natural disasters, and events related to the Iran war.

“Kalshi has gotten rich promoting wagers on sports, elections, natural disasters, events related to the Iran War, and more,” Brown said. “We will continue to enforce Washington law and hold Kalshi accountable for misleading consumers.”

Kalshi has taken the opposite legal position, arguing that contracts traded on its federally registered exchange fall under the CFTC’s exclusive jurisdiction. The company has relied on the Commodity Exchange Act and court decisions supporting federal preemption, including an April ruling from the Third Circuit involving New Jersey.

Court results have not been consistent across the country. Massachusetts, Michigan, Nevada, New York and Washington have obtained rulings allowing at least some state restrictions, while federal courts have blocked enforcement in other jurisdictions.

In Minnesota, for example, a federal judge blocked the state ban before it took effect on Aug. 1. The temporary injunction protected CFTC-registered designated contract markets, including Kalshi and Polymarket US, while related lawsuits moved forward.

Judge Katherine Menendez found that the plaintiffs were likely to succeed on part of their federal preemption argument. However, she did not decide that every event contract qualified as a federally protected swap and said a final order could cover fewer products.

State cases test the limits of CFTC authority

For U.S. users, the conflicting orders can determine which markets remain available based on their location. Kalshi’s federal registration allows it to operate as a designated contract market, but several states maintain that sports and similar products remain subject to local gambling laws and licensing requirements.

The CFTC has responded by suing states and supporting prediction market operators in cases involving state enforcement. Its position rests on the Commodity Exchange Act’s grant of exclusive jurisdiction over swaps traded on registered exchanges.

State officials have challenged that reading, arguing that Congress did not remove their traditional authority over gambling. In July, U.S. District Judge Analisa Torres rejected Kalshi’s request to stop New York from enforcing its laws against sports contracts, finding that the company had not shown that federal law displaced the state’s authority.

Federal oversight also places restrictions on how prediction markets present their products. In August, the CFTC warned regulated platforms against displaying contracts through American-style betting odds and reminded operators that their advertising and solicitation practices must comply with derivatives law.

Separately, the New York City Council has opened an inquiry into alleged deceptive advertising involving Coinbase, Kalshi, Polymarket, and Gemini. The council’s investigation is expected to place particular attention on Polymarket and how prediction-market products are promoted to city residents.

Israel’s Bank Leumi has teamed up with Galaxy Digital to bring cryptocurrency trading to its mobile banking ecosystem, with an anticipated launch in early 2027. The deal would allow eligible customers to buy, hold, and sell Bitcoin, Ether, and Solana via Leumi’s existing trading interface.

Leumi said customers of the bank and its mobile banking arm, Pepper, will be able to access the service through a dedicated area in the Leumi Trade app. If the timeline holds, Leumi would become the first Israeli bank to offer direct digital asset trading to customers through its platform.

Key takeaways

• Bank Leumi plans to enable cryptocurrency trading for Bitcoin, Ether, and Solana through the Leumi Trade app.
• The service is expected to launch in early 2027 for Leumi and Pepper customers.
• Galaxy Digital will provide trading via GalaxyOne Institutional, while its custody infrastructure platform (formerly GK8) will support Leumi’s digital asset infrastructure.
• Galaxy’s wider performance has included a recent quarter with a reported $85 million net loss, though its digital assets segment still posted adjusted gross profit growth.

Leumi Trade expands into digital assets

The partnership centers on integrating crypto trading directly into Leumi’s customer experience. Under the agreement, Leumi customers will be able to access the purchase, holding, and sale of three major cryptocurrencies—Bitcoin (BTC), Ether (ETH), and Solana (SOL)—through a dedicated section of the Leumi Trade app.

Leumi’s announcement frames the offering as a broad retail and business upgrade: the bank said it serves millions of customers across its retail and commercial operations. For users, the main practical difference is convenience—rather than routing activity through separate crypto platforms, customers would be interacting with crypto functions inside a familiar banking app.

Galaxy Digital’s infrastructure powers the rollout

Leumi said it will use GalaxyOne Institutional for trading and related services. On the custody side, Galaxy will support the bank’s digital asset infrastructure using its custody infrastructure platform, previously known as GK8.

This division of responsibilities matters because crypto trading at banks typically depends on two pillars: reliable execution and secure asset management. By separating trading services from custody infrastructure within Galaxy’s stack, the partnership is set up to cover both areas that often determine whether institutional-grade crypto operations can be scaled for retail clients.

At the same time, the early-2027 schedule underscores that such integrations can be complex—especially when the goal is to connect consumer-facing banking workflows with digital asset custody and market-facing trading systems.

Why the timing and “first” claim are meaningful

Leumi’s statement that it would become the first Israeli bank to offer digital asset trading services to customers positions the move as a potential competitive inflection point. If it delivers, Leumi would be attempting to translate the broader growth of crypto into a regulated banking distribution channel.

However, readers should note that the claim is specific: the “first” status is tied to offering trading services to customers through the bank’s own platform. That doesn’t preclude other routes to crypto access in Israel, but it does highlight the bank-distribution angle—bringing trading capability into mainstream financial UX.

From an investor and market structure perspective, bank-led distribution can change how crypto products are packaged and who bears operational friction. It may also affect liquidity flows by concentrating customer activity into regulated intermediaries rather than purely crypto-native venues, though the exact market impact will depend on how volumes scale after launch.

Galaxy’s financial backdrop and what to watch

The Leumi partnership follows Galaxy Digital’s previously reported struggles in the broader market environment. Earlier coverage noted that Galaxy reported an $85 million net loss in the second quarter, which the company said was largely linked to declining digital asset prices. Even so, Galaxy stated its digital assets business generated $66 million in adjusted gross profit, up 34% from the prior quarter.

Galaxy Digital is led by Mike Novogratz and began trading on the Nasdaq in May 2025 under the ticker GLXY, according to an investor release from the company. Earlier company coverage described its listing plans, and Yahoo Finance shows GLXY trading at $21.38 on Friday morning, up about 2% on the day but down roughly 25% over the past year, based on the data cited.

For Leumi customers, these numbers are not directly determinative of whether the crypto app launches smoothly. But for the broader market, they offer context: Galaxy is taking on a new banking integration while working through the volatility and drawdowns that have characterized parts of the crypto cycle.

What to watch next will likely include whether Galaxy’s institutional services and custody infrastructure are able to support a consumer-facing launch on schedule, and how Leumi structures the customer experience once the service goes live. Since the expected launch is still more than a year away, the next concrete signals for users and industry observers will be product rollouts, regulatory readiness, and any beta phases or phased feature releases inside Leumi Trade.

Until then, the partnership is best understood as a forward-looking bet on mainstream distribution: if Leumi Trade’s crypto access launches as planned, it could mark a meaningful step toward bringing large-bank channels into the day-to-day tooling of crypto buyers and sellers in Israel.

Israel’s largest bank has partnered with Galaxy to offer Bitcoin, Ether, and Solana trading through its investment app from early 2027.

Galaxy announced the partnership with Bank Leumi on Aug. 14, saying the planned service will let customers buy, hold, and sell three cryptocurrencies without leaving the bank’s capital markets application.

The service is expected to become available in early 2027 and will cover customers of both Leumi and PEPPER, its mobile banking arm. Users will find the trading tools inside a dedicated, secured section of the Leumi Trade app, according to the announcement.

Bank Leumi, which describes itself as Israel’s leading financial institution, serves millions of households, small businesses, and corporate clients. Once the service goes live, it will become the first bank in Israel to provide digital asset trading directly to customers, the companies said.

Bank Leumi crypto trading will begin with three assets

Bitcoin, Ethereum, and Solana will form the initial asset list, giving customers access to the three networks through an existing banking interface rather than a separate crypto exchange or self-custody wallet.

The announcement did not disclose trading fees, minimum purchase amounts, or whether the bank will add more assets after launch. Galaxy and Leumi also did not specify whether all customers will receive access at once or whether the service will begin with a phased rollout.

By placing the service inside Leumi Trade, the bank will combine crypto transactions with the application customers already use for capital markets activity. Bank Leumi said the arrangement will provide access through a regulated banking framework, while Galaxy will supply the systems needed to execute trades and support the underlying assets.

Maya Ravia, head of strategy at Bank Leumi, said the initiative would expand the financial services available to customers and provide “simple, secure, and regulated access” to digital asset trading.

“We believe that digital assets are gradually becoming an integral part of the global financial system, and it is our role to enable customers to benefit from this development within a reliable, secure, and regulated banking framework.”

Rather than building every part of the service internally, Leumi will use two Galaxy products for separate functions. GalaxyOne Institutional will provide trading and related services, while Galaxy’s Custody Infrastructure platform will support the bank’s digital asset operations.

Galaxy will provide trading and custody infrastructure

GalaxyOne Institutional combines services including crypto trading, financing, staking, custody and research for banks, asset managers, and other professional clients. Under the Leumi agreement, the platform will handle the trading side of the bank’s planned offering.

For custody infrastructure, Leumi has signed a separate agreement covering the Galaxy platform, formerly known as GK8. Galaxy acquired GK8 from bankrupt crypto lender Celsius in 2023 and later incorporated the technology into its institutional infrastructure business.

Lior Lamesh, CEO of Galaxy Israel, said the company is building a single platform that links trading and custody for banks. He described Leumi as the first Israeli bank to bring digital asset trading to its customers.

“The future of finance will run on open, programmable rails, and we believe the banks that move first will define the era that follows,” Lamesh said.

Galaxy did not disclose the value or duration of either agreement. The announcement also provided no details about how customer assets will be held, whether the bank will use segregated wallets or what withdrawal options may be available.

Bank Leumi’s selection of Bitcoin and Ether gives customers access to the two largest cryptocurrencies by market capitalization. Solana’s inclusion places a third network alongside them at launch, although the announcement did not say whether staking will be offered for ETH or SOL.

Galaxy has added more banks to its institutional network

The Leumi agreement follows several 2026 deals through which Galaxy has supplied crypto infrastructure or services to established financial institutions.

Earlier in August, crypto.news reported on BNY adding Galaxy’s staking infrastructure to its Digital Asset Custody platform. The planned service will allow eligible institutional clients to hold and stake supported assets through one servicing model, subject to regulatory review.

BNY said Galaxy would act as both an infrastructure provider and a design partner. Clients would keep their assets within BNY’s custody framework while using Galaxy’s systems to participate in proof-of-stake networks, although the companies had not disclosed the supported assets or launch date.

In June, Galaxy also entered a Morgan Stanley arrangement for eligible wealth-management clients holding Bitcoin, Ether, and Solana. Under the referral setup, clients can lend at least $5 million in digital assets to Galaxy and receive shares in spot crypto investment products, including the Morgan Stanley Bitcoin Trust.

The companies said the process can reduce crypto-to-exchange-traded-product onboarding times by as much as 75%. Morgan Stanley clients previously faced a $25 million minimum for the service before Galaxy lowered the threshold to $5 million under the referral arrangement.

Galaxy’s work with Leumi differs in customer scope because it places direct buying, holding, and selling functions inside a retail-facing bank application. The BNY agreement focuses on staking for eligible institutions, while the Morgan Stanley arrangement serves high-net-worth clients moving existing crypto exposure into investment products.

U.S. investors can access Galaxy through Nasdaq

Although the Leumi trading service is intended for the Israeli bank’s customers, Galaxy is a New York-headquartered public company whose Class A shares trade on Nasdaq under the GLXY ticker. American investors can therefore gain equity exposure to the company supplying Leumi’s trading and custody infrastructure, though the firms did not disclose the agreement’s expected financial contribution.

Galaxy also operates regulated digital asset services in the United States. In May, its GalaxyOne Prime NY subsidiary secured a BitLicense and a Money Transmission License from the New York State Department of Financial Services.

The approvals allow the subsidiary to provide digital asset trading and custody services to hedge funds, registered investment advisers, and family offices in New York. At the time of the approval, Galaxy said its platform managed about $9 billion in client assets and held more than 50 licenses across its international regulatory network.

New York’s framework requires licensed digital asset companies to meet capital, compliance, and cybersecurity requirements. Galaxy became the second company to receive a BitLicense in 2026, following payments company Strike, while other license holders include Coinbase, Circle, Robinhood, and PayPal.

Outside its digital asset operations, Galaxy also develops data center infrastructure in the United States. The company’s Helios campus in Texas anchors a planned pipeline with more than 5.7 gigawatts of potential capacity, according to its Aug. 14 announcement.

Bank Leumi was founded more than 120 years ago and operates without a controlling shareholder. The bank said its customer base covers individuals, small and medium-sized businesses, and large corporations through physical branches and digital services.

UK Reform leader Nigel Farage is set to face renewed scrutiny from the UK Parliament’s standards watchdog after the Parliamentary Commissioner for Standards reopened an investigation into whether he properly disclosed certain financial interests.

According to the Parliamentary Commissioner for Standards’ public register, Farage is currently under investigation for “failure to register an interest” tied to donations and benefits reportedly connected to the crypto industry, after an earlier pause followed his resignation from Parliament and later resumption after he returned as an MP.

Key takeaways

• The Parliamentary Commissioner for Standards says Farage is under investigation for “failure to register an interest” involving crypto-linked donations and gifts.
• The probe was paused when Farage resigned as an MP and resumed after he was reelected in the Clacton by-election.
• Coverage of the matter points to claimed gifts reportedly funded by Christopher Harborne and staff/security arrangements involving George Cottrell.
• If the commissioner finds a breach of parliamentary rules, Farage could face suspension, potentially triggering another by-election.

Parliamentary standards watchdog restarts Farage probe

As of Friday, the UK Parliamentary Commissioner for Standards website lists Farage as “currently under investigation” for failing to register an interest. The issue relates to alleged benefits and donations described as running into the millions of dollars and connected to two individuals tied to the crypto sector.

The investigation had been temporarily halted in July after Farage stepped down from Parliament, but it restarted once he regained a seat. Earlier coverage highlighted that Farage resigned as an MP amid the controversy surrounding crypto donations, then later returned to Parliament following his reelection in Clacton.

What the standards probe is expected to examine

The commission is expected to look at whether Farage complied with UK parliamentary disclosure obligations regarding financial interests and benefits received in the relevant period.

In the commissioner’s listing, the scrutiny centers on Farage receiving gifts reportedly involving Christopher Harborne, described in reporting as a crypto billionaire, who was said to have given Farage $6.7 million. The listing also points to arrangements supporting Farage’s staff and security being funded by George Cottrell, described in reporting as a convicted fraudster linked to a crypto casino.

Under UK rules, new MPs must register financial interests within a month of their election, and they must also disclose relevant benefits received in the preceding 12 months. The rules are aimed at ensuring that Parliament can assess any potential conflicts of interest as soon as lawmakers take office.

Why the disclosure question matters politically and procedurally

Farage’s probe could carry real procedural consequences. If the standards investigation concludes that he violated parliamentary regulations, the commissioner’s findings could lead to suspension from Parliament. That, in turn, can open the door to another by-election.

The by-election that brought Farage back to the Commons followed his earlier resignation. In that contest, he won with 63% of the vote, according to BBC coverage, defeating satirical candidate Count Binface, who received 27%. None of the other major parties took part, and UK Prime Minister Keir Starmer—then still Labour’s leader—criticized Farage’s approach as a “desperate stunt.”

While Farage has previously characterized the donations as rewards or gifts given “on an unconditional basis,” the parliamentary process is likely to focus less on labels and more on whether the benefits were disclosed according to the letter of the rules.

Broader debate over crypto-linked political donations

The Farage controversy has also fed into a wider discussion in the UK political sphere about whether donations with crypto connections create opportunities for undue influence.

Reporting on the parliamentary fallout said Labour lawmakers proposed making a moratorium on crypto donations—implemented in March—permanent. That push is framed around concerns about potential influence from foreign actors.

According to the International Bar Association, unincorporated associations in the UK are allowed to give more than $675 directly to politicians. The same analysis warns that this structure can create loopholes where funds may operate as a “conduit” for “foreign or dark money.” The tension here is straightforward: even if individual payments are not formally prohibited, disclosure gaps and complex funding channels can make it difficult for voters and regulators to understand who is truly behind political support.

What to watch next

For investors, traders, and builders who pay attention to how regulation and political risk intersect with crypto, the immediate question is whether the commissioner’s review results in a finding of non-compliance—and, if so, what sanctions Parliament ultimately applies. The next milestone will be how the standards investigation substantiates the disclosure timeline and whether the alleged benefits are treated as registrable financial interests under UK rules.

President Donald Trump is expected to be in attendance when the administration’s new innovation committee — a crowd of crypto CEOs and leaders of prediction market and AI companies — sits for a White House meeting on Wednesday, said people briefed on the planning.

The chief executives of companies such as Coinbase, Ripple, Gemini, Robinhood, Polymarket and Kalshi are members of the new Innovation Advisory Committee at the Commodity Futures Trading Commission, but before they attend their first committee meeting on Thursday, the crypto CEOs will gather for the White House meeting, said the people, who asked not to be named, and participants have been told Trump is planning to attend.

The meeting, expected to be held at the Eisenhower Executive Office Building next door to the White House, is meant to get a policy dialogue started in some of the leading arenas for U.S. innovation. The roster at that meeting was also expected to include CFTC Chairman Mike Selig and other advisers, the people said. One of them added that Treasury Secretary Scott Bessent and Secretary of Commerce Howard Lutnick may attend.

White House spokespeople didn’t immediately respond to requests for comment on the plans.

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.