World Exchange Alliance: SEC should not allow crypto companies to “bypass” existing rules

According to Odaily Planet Daily, the World Federation of Exchanges (WFE) sent a letter this week to the U.S. Securities and Exchange Commission (SEC), stating that the SEC may plan to grant regulatory exemptions to crypto companies to sell “tokenized” shares, which could harm investors’ interests.

Several crypto companies plan to sell crypto tokens pegged to publicly traded stocks to retail investors, allowing them to gain exposure without directly owning the shares. However, to sell these products in the United States, crypto companies not registered as broker-dealers require a no-action letter or exemption from the SEC.

SEC Chairman Paul Atkins has stated that the agency is developing an "innovation exemption" for securities laws to allow crypto industry players to experiment with new business models.

In a letter dated November 21, the World Federation of Exchanges (WFE) stated that such exemptions could pose a risk to market integrity and undermine investor protection. WFE members include the US Nasdaq and the German Deutsche Boerse.

WFE CEO Nandini Sukumar told Reuters, "The SEC should avoid granting exemptions to companies that are trying to circumvent regulatory principles that have protected the market for decades."

The SEC published the WFE's letter on its website but declined to comment.

WFE stated that it "supports innovation" and called tokenization "a natural evolution of capital markets." James Auliffe, head of WFE's technical working group, said, "We and crypto platforms should compete on a level playing field, and we should abide by the same rules."

Issuers of tokenized stocks say that integrating blockchain technology into the stock market can improve trading efficiency. Auliffe stated that the current stock market is already very efficient. (Reuters)