SEC Delays ‘Innovation Exemption’ Again, Dragging Down Tokenization Stocks and DeFi Tokens

Tokenization-related stocks and decentralized finance tokens fell broadly after the U.S. Securities and Exchange Commission again delayed the rollout of its closely watched innovation exemption.

CoinDesk reported on August 15 that the SEC delayed applying the proposed exemption, which is intended to simplify the issuance and trading of tokenized securities. The agency also abruptly canceled a meeting on crypto-related regulatory proposals that had been scheduled for Friday.

The setback sent related shares lower. Bullish sank about 8% in early trading, while blockchain-based lender Figure Markets (FIGR) dropped about 9%, giving back the previous day’s gains. Coinbase, which is seeking to enter the tokenized stock market, and Circle, which operates tokenized Treasury products, also fell about 2% and 4%, respectively.

The fallout spread to the DeFi market. The innovation exemption had been expected to ease regulatory pressure on decentralized exchanges as well. Uniswap (UNI) slid 7% over the past 24 hours, the biggest decline in the crypto market.

The policy delay is being interpreted as a response to strong opposition from the White House and traditional financial firms over concerns about the measure’s limited legal basis and the risk of market disruption. Still, experts view the move as a temporary slowdown rather than the abandonment of the framework itself. “Tokenization has hit a speed bump, but its underlying momentum has not been broken,” Owen Lau, executive director at Clear Street, said. With traditional financial institutions also building 24-hour tokenized trading infrastructure, he added, the timing of the market’s opening may simply be pushed back depending on when deregulation moves ahead.