The following summarises an opinion column by Andrew Cuomo, former Governor and Attorney General of New York. Cuomo sits on the board of OKX and co-chairs a joint venture between Intercontinental Exchange, parent of the New York Stock Exchange, and OKX that builds infrastructure for tokenized financial products. He is therefore commercially positioned in the market he is arguing should receive clearer rules. CoinDesk notes the views are the author own.
- On September 17 the SEC created what it calls an Innovation Exemption, a temporary conditional framework letting qualified venues use automated market makers and liquidity pools to trade certain tokenized stocks listed on American exchanges without registering with the SEC. The exemption runs five years.
- The conditions are substantial. All venue participants must be permissioned, tokenized shares must carry the same rights as the equivalent traditional class, venues face limits on the number and volume of tokenized securities they can trade, issuers may object to their shares being tokenized by unaffiliated third parties, smart contracts must be auditable and deployed on public blockchains, and trading must halt when the underlying security is halted.
- Two days earlier, on September 15, the Senate failed to advance the Digital Asset Market Clarity Act. The cloture motion drew 49 votes, short of the three-fifths threshold, leaving unresolved disputes over consumer protection, banking, ethics, illicit finance and the division of authority between the SEC and CFTC.
- SEC Chairman Paul Atkins described the exemption as a bridge toward durable rulemaking, which Cuomo notes is an acknowledgement that it is not a permanent regulatory architecture.
What Happened?
Cuomo argues that the question is no longer whether blockchain technology reaches traditional capital markets but how existing markets incorporate it and under what rules. He draws on his time as New York attorney general during the financial crisis, when subprime lending and complex mortgage securities were presented as innovations that expanded credit access and distributed risk, and instead transmitted it. His conclusion is not that innovation should stop but that innovation and regulation must develop together, and he characterises the SEC approach as using regulation as a laboratory. He also reports meeting European regulators and market participants over recent weeks, noting the EU has established common frameworks and is learning from implementation despite growing pains with its own distributed-ledger infrastructure. His central claim is that predictability matters as much as stringency, since a strict but clear rule can be planned around while persistent uncertainty cannot be priced, and that jurisdictions with credible frameworks attract investment, talent and infrastructure.
Why It Matters?
The conditions listed here should temper the market reaction to this exemption. Tokens tied to trading infrastructure rallied as much as 50% in the days after the SEC acted, on the expectation that tokenized equity volume would flow to onchain venues. But permissioned participants, caps on the number and volume of tokenized securities, an issuer veto over third-party tokenization and mandatory trading halts mirroring the underlying market describe a narrow pilot rather than an open market. The issuer objection right in particular means companies can simply decline, which caps the addressable universe at whatever subset of listed issuers consents. Anyone sizing this opportunity from the price action rather than the terms is working from the wrong document. Cuomo durability argument is correct and matches the structural problem across every recent US crypto action: agencies act under authority Congress already granted, exemptions expire, rules can be amended by future commissions and challenged in court. A five-year window is a short planning horizon for market infrastructure that takes years to build. His subprime analogy sits a little awkwardly with his conclusion, since the lesson he draws from innovation outpacing oversight is an endorsement of permitting trading without registration, and the 2008 comparison cuts as easily against the laboratory approach as for it. Readers should also weigh that he is making this case while building tokenization infrastructure with ICE and OKX, which does not make the argument wrong but does mean he benefits from the clarity he is urging.
What Next?
Watch which venues actually qualify under the exemption and how many issuers consent to having their shares tokenized, since the issuer veto is the binding constraint on scale. The volume limits the SEC imposes will determine whether this produces meaningful liquidity or a demonstration, and those caps are the specific numbers to seek out. Congress remains the durable route, and after a 49-vote cloture failure the question is whether a narrower bill can attract the eleven additional votes needed. Atkins framing of the exemption as a bridge implies formal rulemaking should follow, so any proposed rule with a comment period would be the signal that the temporary framework is becoming permanent. On the competitive side, Europe has common frameworks already in force and ESMA has made tokenization a supervisory priority from 2027, so the mobility of capital Cuomo describes is testable over the next two years.
Affected Tickers and Coins: ICE, COIN, HOOD, NDAQ
Source: CoinDesk
