SEC Chair Atkins considers innovation exemption to boost tokenization

Paul Atkins, Chair of the U.S. Securities and Exchange Commission (SEC), has publicly confirmed the agency is exploring an “innovation exemption” aimed at accelerating the development and adoption of asset tokenization. This move signals a notable shift toward more supportive regulation for the digitization of securities and other real-world assets via blockchain technology.

The innovation exemption would provide regulatory flexibility, allowing room to experiment with infrastructures essential for tokenized securities etc. The SEC aims to foster a thriving tokenized ecosystem without compromising fundamental investor protections.

Atkins' approach departs from previous SEC leadership, which was often criticized for rigid enforcement on digital assets. Instead, Atkins asserts that if an asset can be tokenized, it inevitably will be. He argues for regulatory frameworks built to accommodate innovation while keeping risks in check.

This policy review follows the House’s passage of the GENIUS Act and a federal stablecoin bill, both regarded as landmark steps in establishing regulatory clarity and legitimacy for blockchain-based financial technologies in the U.S. The stablecoin legislation, which now awaits presidential approval, sets new standards for reserves and risk management among stablecoin issuers.

Major financial platforms have launched offerings with tokenized U.S. stocks for European users. The institutional push to tokenize everything from publicly listed equities to private company shares has accelerated, reinforcing the SEC’s view that supportive regulation is now essential.

The SEC’s staff is actively assessing what additional policy and rule changes, including the proposed innovation exemption, are needed to incentivize tokenization within the existing regulatory framework.

Further clarity is expected as the agency rolls out new guidance and as the GENIUS Act and stablecoin regulations are implemented.

The SEC’s proposed direction has received bipartisan support in Congress, but some lawmakers and consumer advocates remain concerned about potential gaps in investor protection.

The stablecoin bill requires issuers to maintain reserves in ultra-safe, government-backed assets under regulatory oversight, aiming to strengthen the sector’s credibility.

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