JP Morgan and SIFMA flag gaps in SEC tokenized stock exemption

During the SIFMA annual conference, JP Morgan and the Securities Industry and Financial Markets Association raised significant concerns regarding the SEC’s new Innovation Exemption for tokenized securities venues. The framework, which took effect on September 17, allows platforms to trade tokenized versions of stocks without traditional exchange registration, provided they adhere to specific volume caps. SIFMA’s formal comment letter highlights that the current rules provide issuers only a narrow window to block third-party tokenized representations of their shares. Furthermore, the association warns that the current per-venue volume caps could be exploited by entities opening multiple venues to bypass aggregate limits. With two venues already poised to begin trading within weeks and 16 issuers having already filed objections, the industry is pushing for more robust oversight. SIFMA advocates for an extended objection period for issuers and requests that the SEC monitor and publish aggregate trading volumes across all platforms. This debate is critical for the RWA market as it establishes the regulatory precedent for how traditional equities interact with blockchain-based trading infrastructure.