Written by: Xiaobing, Deep Tide TechFlow

On May 22, according to Bloomberg, the US SEC originally planned to officially release a draft of the "innovation exemption" framework this week, which had been written and undergone an internal review. However, after intense lobbying from industry organizations behind traditional exchanges such as Nasdaq, Cboe, and CME Group, the SEC has decided to postpone the timeline for its release.

The tokenization route of the US capital market is splitting into two incompatible tracks.

It’s not the policy that is stuck

First, let’s clarify what this "innovation exemption" the SEC is about to announce is.

The core of this "innovation exemption" is to open a special channel for crypto-native platforms: allowing them to issue and trade tokens that track US stock prices on decentralized exchanges without having to complete the traditional securities exchange compliance process. SEC Chairman Paul Atkins, in previous public appearances, defined this framework as a "regulatory sandbox for stock trading on the blockchain."

It sounds great. But the devil lies in one specific provision of the draft, allowing the circulation of "third-party tokens."

所谓第三方代币，就是上市公司本身完全不知情、不授权的"合成版股票"。某个加密平台可以自己买入苹果股票托管起来，然后在链上发行一种 1:1 锚定苹果股价的代币，丢到 Solana 或者 Arbitrum 上，全球任何一个钱包地址都能 24 小时交易。苹果公司不参与、不签字、不知道谁是这些代币的最终持有人。

This method is already taking place, just not in the United States. xStocks (backed by Backed Finance, acquired by Kraken last December) has issued over 60 tokenized US stocks on Solana, with a total on-chain and exchange trading volume exceeding $10 billion in six months; Robinhood has launched 943 tokenized stocks and ETFs on Arbitrum. Both have clearly adopted what is referred to in the industry as the "Rebasing (Third-Party)" model, with no legal relationship between them and the listed companies being tokenized.

The SEC's original draft essentially issues a visa for this business model, which has already been proven overseas, to return to the United States.

But this visa pokes a hole in a window pane that everyone sees but no one wants to break: If Apple does not know who holds its "stock tokens," how can it distribute dividends? How can it calculate shareholder votes? How can it deal with addresses on the sanctions list?

Financial analyst Austin Campbell asked this question very straightforwardly: When a company does not know who the holders are, dividend distribution becomes an unsolvable technical issue; if the crypto platform's KYC is not in place, sanctioned entities could potentially gain economic exposure to US stocks through offshore channels.

Another path from Nasdaq

One thing that many people have not noticed is that the SEC has actually already approved tokenized stock trading.

In March of this year, Nasdaq's tokenized securities program was approved by the SEC; in April, the NYSE followed suit. Both are following the same path: tokenized stocks and traditional stocks are traded concurrently within the same order book, using DTCC's (Depository Trust & Clearing Corporation) enterprise-grade blockchain for underlying settlement, retaining the complete shareholder rights corresponding between tokens and stocks.

This path essentially upgrades the existing clearing and settlement systems, allowing stocks to be traded in "tokenized form" in a compliant, KYC-complete, and regulatory environment. Voting rights are preserved, dividends are preserved, and the shareholder register remains with DTCC, so no one can escape.

For Nasdaq, Cboe, and CME, this is the tokenization they can accept, with their fee structures, market maker networks, and regulatory license values intact. The blockchain is just a new gauge, but the locomotive is still theirs.

But crypto-native platforms want something different. They want a fully on-chain, 24/7, composable, and DTCC-independent parallel market, where xStocks tokens can be used as collateral on Raydium, can be integrated into DeFi legos, and can be purchased by any wallet with any amount of USDC. The appeal of this system lies precisely in its deviation from traditional tracks.

Thus, the SEC is not fundamentally faced with the question of "whether to allow tokenized stocks," as that has long been permitted. It is faced with the question of whether to allow two underlying architectures, two compliance assumptions, and two interest structures of tokenization schemes to coexist within the United States.

If the innovation exemption is issued, it means the SEC tacitly acknowledges that the United States could have two parallel US stock markets: one operating under DTCC, preserving all traditional rights as the "white market"; and one running on public chains, supported by third-party issuers as the "gray market." The same Apple stock may be worth $180 in DTCC's token but worth $178 in some liquidity pool on Solana, and arbitrageurs will come to smooth out the price difference, but the legal meaning of "Apple shareholders" will become unprecedentedly vague.

The not-so-polite letter from the World Federation of Exchanges

On November 21, the World Federation of Exchanges (WFE, whose members include Nasdaq, Cboe, CME) sent a letter to the SEC. The content of the letter was not made public until the 27th, but the events unfolding in the following months started from here.

The argument in WFE's letter can be distilled into a somewhat impolite statement: Opening a regulatory fast track for crypto companies that traditional exchanges cannot access will "dilute" investor protection, "distort" market competition, and "will inevitably lead to negative, possibly acute consequences."

Translated, this means: you either stay out of it, or treat everyone equally. It’s unfair to give crypto companies a backdoor.

This time, the exchanges' lobbying has several notable characteristics.

First, it is not a single company, but an industry organization, which means a collective decision has been made.

Second, the timing is very precise, as the SEC's internal draft is still under review.

Third, even Ondo Finance (the second-largest player in the compliant tokenization sector) and Cboe expressed a desire for delays in their opinions on the Nasdaq proposal, citing that DTCC's clearing guidelines had yet to be established.

In other words, the opposition does not only consist of traditional finance; even within the compliant camp, tokenization players wish for the SEC to slow down. The reason is not hard to understand: if third-party tokens can legally bypass DTCC, then players like Ondo who play by the rules, acting as compliance intermediaries and shareholder confirmation agents, would end up being the fools dancing with shackles.

The most challenging opponents in the face of regulation are never those who oppose you, but those who stand on the same side as you but take different paths.

Hester Peirce's Twitter

Not all voices within the SEC are unified on this matter.

On May 21, the day before the draft was put on hold, SEC Commissioner Hester Peirce tweeted a message, in which one line was very critical. She stated that her expectations for this exemption "have always been limited in scope, only covering those digital representations of equity securities that are already traded in public secondary markets."

Read it twice. The implied meaning of this sentence is: synthetic tokens (derivatives that are not backed by real stocks and purely replicate price exposure) have never been part of the exemption scope from the start.

Peirce's tweet almost simultaneously draws the line. She tells the market two things: first, the exemption is not dead, just being handled with caution; second, even she, the "crypto mom" most friendly to the crypto sector, does not intend to open the door for purely synthetic products that are not backed by underlying assets.

Putting Peirce's statement and the pressure from the opposition alliance together, the internal divisions within the SEC become clear:

• Atkins (Chairman): Leans towards quickly issuing the exemption and locking in tokenization as part of America's fintech competitiveness;
• Peirce: Supports the exemption but insists it should be strictly narrowed to "real tokenization," excluding any synthetic products that do not back underlying stocks;
• Staff: Lean towards waiting a bit longer amid pressures from exchange lobbying and governance concerns from listed companies;
• Investor Advisory Committee: Officially recommended advancing the tokenization framework back in March, indicating support at the committee level.

This is a typical "policy willingness at the top, technical resistance at the middle, compliance concerns externally" sandwich structure. Atkins wants speed, Peirce wants rigor, the staff wants stability, and external stakeholders want slowness. The result is familiar: the draft is written but cannot be released.

Why is this important?

The story of tokenized stocks has repeatedly appeared in the crypto circle over the past two years but has mostly been sold as a "narrative," part of the RWA narrative. There are peaks of heat and price increases, followed by a dispersal.

However, the circle that forms in 2026 is a true policy game. There are three reasons:

First, scale has arrived. xStocks has $10 billion in trading volume, Robinhood has nearly $1 billion in on-chain stock assets, and Ondo + Backed + Securitize collectively have over $600 million in compliant tokenized stock inventory. These figures, while not large, are enough to make traditional exchanges feel threatened. When a new thing is small enough to be ignored, no one will stop you; when it becomes large enough to cut into order flow, all vested interests will appear simultaneously.

Second, the path has formed. Third-party tokenization has successfully verified its business model overseas and is now knocking on the door to the United States. Nasdaq and the NYSE have successfully navigated compliance pathways domestically and have been collaborating with DTCC on the underlying infrastructure. If both paths are allowed, the US could have a "dual-track US stock market" without necessarily having a precedent to follow.

Third, the time window is closing. Peirce has accepted a faculty position at Regent University Law School and will leave by the end of 2026. She is the friendliest voice towards crypto within the SEC, and her departure makes the stance of the next commissioner unpredictable. Although Atkins is the chairman, the complexity of a framework requires the cooperation of the entire committee and staff, which cannot be achieved by the chair alone. This window will likely only remain open for another year.

If the third-party tokenization path is permanently blocked in the US, the tokenization infrastructure overseas (especially in Singapore, Switzerland, Hong Kong) will become the de facto standard for global asset tokenization. Kraken's acquisition of Backed, xStocks' expansion into TON/Tron/Mantle/BNB Chain - this industry chain would grow by bypassing the US. If the US ultimately grants the exemption, that chain will be absorbed back into the US, with the stablecoin story repeating, but this time the anchor is not government bonds, it’s stocks.

Finally, I will leave a question that I still haven’t figured out myself.

If indeed two parallel tokenized US stock markets emerge in the future, the DTCC white market and the public chain gray market, when a listed company announces dividends, can holders of those third-party tokens on the chain demand treatment equal to that of DTCC holders?

If they can, who will enforce it? Smart contracts?

If they cannot, what exactly do these token holders possess? Is it economic exposure? Is it synthetic derivatives? Or some form of "quasi-stock" that is tacitly tolerated by regulators but has no legal standing?

This question cannot be answered by the SEC. Atkins cannot answer it. Peirce cannot answer it. The entire Wall Street legal community has not figured it out.

And this is precisely the real reason the SEC hit the brakes at the last minute; they were not persuaded by Nasdaq's lobbying, they were frightened by the draft in their hands. When the policy you are about to announce creates a legally nonexistent but factually $10 billion in daily trading assets, the rational course of action is to read it again.

This "innovation exemption" being put on hold, the next incarnation will be a critical observation window for judging the direction of US crypto policy over the next two years.