SIFMA Challenges SEC Over Tokenized Securities Relief Requests from Crypto Firms

Highlights:

• SIFMA has urged the SEC to reject crypto relief requests that could bypass key investor protection rules.
• The SEC may allow tokenized securities through special orders to help firms avoid early platform registration hurdles.
• Coinbase and Kraken push ahead with tokenized stock plans despite access restrictions in major global markets.

The Securities Industry and Financial Markets Association (SIFMA) has asked the U.S. Securities and Exchange Commission to reject new requests from crypto firms. These firms are interested in issuing tokenized equity with the support of no-action or exemptive relief to circumvent other regulations. SIFMA wrote a letter to the SEC’s crypto task force outlining strong concerns about these efforts. The group believes these requests could allow crypto firms to avoid investor protections that apply to traditional securities.

🇺🇸 NEW: Financial industry group SIFMA urges SEC to reject requests for exemptive relief allowing #crypto tokenized equities trading. pic.twitter.com/P5KyU3ft7s

— CryptOpus (@ImCryptOpus) July 3, 2025

No-action relief means the SEC would choose not to take action against a firm for launching certain products. Exemptive relief enables companies to experiment with products without obeying the laws applicable to standard securities. According to a statement released by SIFMA, such shortcuts would undermine valuable protections and jeopardize market integrity. Therefore, the group urged the SEC to deny such requests and instead open a full notice and comment process.

SIFMA believes these matters carry too much weight to be resolved through fast-track methods. It argued that allowing firms to operate outside the existing legal framework could create uneven standards. The group emphasized that all major changes should go through a formal process involving public input. That way, the risks and impacts can be properly evaluated.

Debate Grows Over SEC’s Approach to Tokenized Securities

SEC Commissioner Hester Peirce has supported a different approach. She said in May that the agency is considering a special order to allow companies to issue, trade, and settle tokenized securities on a blockchain. Peirce explained that many firms face high costs when trying to register with the SEC before launching new platforms. As a result, they may decide not to move forward at all.

Peirce recommended that this problem might be resolved through exemptive relief. She said that it does not make sense to follow rules made long before blockchain technology existed. According to her, flexible treatment could support innovation while still protecting the public.

Industry responses show a divide. Alexander Grieve, the VP of Government Affairs for Paradigm, said traditional players want to protect their market position. He compared the resistance to past cases where established firms pushed back against stablecoins and other crypto products. Grieve added that older firms often try to hold onto power when new systems start to emerge.

Interesting SEC crypto task force filing from @SIFMA — the trade assoc that reps the traditional securities industry, in response to ongoing efforts by crypto to work with the Commission to bring equities onchain.

TL;DR: they hate it & want to protect their market position pic.twitter.com/92GLla0Lqh

— Alexander Grieve (@AlexanderGrieve) July 2, 2025

Bill Hughes from blockchain firm Consensys supported SIFMA’s focus on process. He said changes that affect how the public accesses stocks should go through open discussions. Hughes warned that relying on private agreements or one-time relief measures could lead to confusion. He also noted the challenge of dealing with assets that connect both crypto and traditional systems.

IMO @SIFMA's primary argument is procedural and a reasonable one at that: if we are going to be changing substantive rules on how retail participants can access securities – specifically publicly traded stock, then we should be doing that through notice and comment rulemaking… https://t.co/Tvj83utdOB

— Bill Hughes 🦊 (@BillHughesDC) July 2, 2025

 

Crypto Exchanges Test Demand Despite Limited Access

Some crypto exchanges have already moved ahead. Coinbase has shown strong interest in launching tokenized equities and has made this effort a top priority. The company’s legal chief confirmed that it has asked the SEC for approval.

In the meantime, Kraken has launched tokenized stock trading. The tokens are representative of shares in large firms. However, Kraken has limited the service to users outside the United States, Canada, the United Kingdom, the European Union, and Australia. As a result, demand remains uncertain while companies wait for clear decisions.