Global Exchanges Warn SEC: No Special Rules for Crypto Stocks

Global exchanges urge the SEC to avoid broad exemptions for crypto firms offering tokenized stocks, warning that such relief could undermine investor protections and market integrity.

The World Federation of Exchanges (WFE), representing major global exchanges such as NYSE, Nasdaq, and CME Group, has called on the U.S. Securities and Exchange Commission (SEC) to avoid granting broad regulatory exemptions to crypto firms offering tokenized stocks. The WFE warns that exemptive relief for these platforms could undermine investor protections and market integrity, as tokenized stocks are often marketed as equivalents to traditional shares but may lack legal safeguards and regulatory oversight. The federation argues that all platforms, including crypto firms, should adhere to the same rules as traditional exchanges to ensure a level playing field and prevent risks such as fraud, market manipulation, and limited investor recourse. The WFE opposes the idea of an "innovation exemption" that would allow crypto firms to bypass full compliance, emphasizing that innovation should not come at the expense of fundamental regulatory principles. The SEC is currently considering frameworks that could allow temporary relief for crypto firms, but the WFE insists that consistent regulation is essential to protect investors and maintain market stability.