US Exchanges Warn Against Letting Crypto Firms Dodge Market Rules
GeokHub
Contributing Writer
WASHINGTON, Nov. 26, 2025 — A coalition representing major global and U.S. stock exchanges has urged the U.S. Securities and Exchange Commission (SEC) not to grant exemptions to cryptocurrency firms that would let them offer “tokenised stocks” without following traditional securities-market rules.
In a letter sent this week, the coalition — including leading exchanges — expressed concern that allowing such bypasses could undermine decades-long regulatory safeguards aimed at protecting investors and ensuring fair, transparent markets. Their warning comes as some crypto-firms push for regulatory relief under a proposed “innovation exemption,” seeking the right to let retail investors buy crypto-tokens representing equities without going through standard broker-dealer registration or compliance protocols.
The group argues that giving crypto platforms the ability to sell tokenised versions of existing stocks — without subjecting them to the same oversight as traditional stock exchanges — would create an uneven playing field, erode investor protection, and threaten market stability. They insist that if digital-asset firms are entering equity markets, they must operate under the same disclosure, auditing, and compliance standards as legacy exchanges.
Tokenised equities appeal to some investors because they promise fractional ownership, instant trading, and access via digital-asset wallets rather than traditional brokerage accounts. But critics say that the simplicity masks complexity: unlike standard shares, these tokens may lack legal protections such as shareholder rights, regulatory oversight, or recourse mechanisms — raising the risk of fraud, lack of transparency, or market manipulation.
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Supporters of the crypto-led model argue tokenisation is the “natural evolution” of capital markets, offering innovation, cost-efficiency, and broader access. But the exchanges’ letter underscores that efficiency shouldn’t compromise foundational protections built over decades.
The SEC — currently reviewing proposals for regulatory overhaul in the crypto space — now faces pressure not only from crypto firms seeking flexibility, but also from traditional exchanges demanding parity and regulatory consistency. Any decision to grant exemptions could reshape how equities are bought, sold, and governed.
If the SEC sides with exchanges, crypto platforms wishing to offer tokenised stocks may have to comply with existing securities laws: register as broker-dealers, meet reporting and disclosure requirements, and ensure investor protections. If the SEC grants exemptions, it could open the door to a new hybrid marketplace — but with significant regulatory risks.
The coming weeks may therefore prove decisive for the future of equity markets, crypto innovation, and investor trust — as regulators weigh innovation against stability in an increasingly digital financial world.
