Author: Nancy, PANews
Tokenized assets (RWA) are sparking a global on-chain wave. The influx of capital and the diversity of assets are rapidly turning this on-chain movement from a crypto-native testing ground into a new battleground for Wall Street.
While the RWA sector is developing rapidly, there is a divergence between TradFi (Traditional Finance) and Crypto. On one side, Wall Street is more focused on regulatory arbitrage and systemic risk, emphasizing stability and order; on the other side, the crypto industry pursues innovation speed and decentralization, worrying that existing frameworks will restrict development.
Several months ago, the SEC announced it would introduce a package of crypto innovation exemption mechanisms, planned to take effect this January. However, this pro-crypto radical policy encountered strong opposition from Wall Street. Influenced by the legislative pace of the crypto market structure bill, the originally promised effective date is set to be postponed.
Surrounded by Wall Street, Crypto Exemption May Be Delayed
This week, JPMorgan Chase, Citadel, and SIFMA (Securities Industry and Financial Markets Association) held a closed-door meeting with the SEC's crypto working group. At the meeting, these Wall Street representatives explicitly opposed providing broad regulatory exemptions for tokenized securities and advocated for the application of the existing federal securities law framework.
The crypto exemption mechanism is a "green channel" tailor-made by the SEC for crypto products like tokenized securities and DeFi. It aims to allow these projects to temporarily bypass cumbersome full securities registration and quickly launch innovative products, provided certain investor protection conditions are met.
However, regarding the SEC's plan to fast-track tokenized assets through regulatory shortcuts, these financial institutions issued stern warnings. They argued that this move could harm the overall U.S. economy and recommended that regulators implement strict,穿透式管理 (penetrating regulation), rather than simply granting exemptions. Even if any exemptions for innovation exist, they must be narrow in scope, based on rigorous economic analysis, and have strict guardrails,绝不能取代全面的规则制定 (and must not replace comprehensive rulemaking).
They further emphasized that regulatory treatment should be based on economic characteristics, not the technology used or category labels (e.g., DeFi), and advocated for the regulatory principle of "same business, same rules." They strongly opposed establishing a dual regulatory standard, arguing that any broad exemption attempting to circumvent long-standing investor protection frameworks would not only weaken investor protection but also lead to market chaos and fragmentation.
The meeting also specifically mentioned the flash crash事件 (event) in October 2025 and the collapse of Stream Finance as cautionary tales, emphasizing that allowing tokenized securities to operate outside the protection of existing securities laws would pose significant systemic risks to the U.S. financial market.
Simultaneously, Wall Street also expressed concerns about the SEC's inclination to exclude some DeFi projects from compliance obligations. SIFMA pointed out that many so-called DeFi protocols actually perform the core functions of brokers, exchanges, or clearing agencies but exist in a regulatory vacuum. The DeFi environment harbors many unique technical risks, including predatory trading from Maximal Extractable Value (MEV), pricing mechanism flaws in Automated Market Makers (AMMs), and opaque conflicts of interest. However, DeFi was not the sole focus of this meeting. According to Decrypt, main advocates for DeFi were unaware of this meeting.
Furthermore, regarding wallet providers involved in tokenized asset activities, the meeting emphasized that wallets executing core brokerage业务 (business) and earning transaction-based收益 (revenue) must register as broker-dealers, distinguishing between non-custodial and custodial wallet models.
Ultimately, Wall Street's attitude is very clear: embracing innovation does not necessitate starting from scratch. Rather than building a parallel, independent regulatory system, it's better to place tokenized assets within the cage of the existing mature compliance framework.
The highly anticipated crypto exemption mechanism now faces uncertainty. SEC Chair Paul Atkins has withdrawn the previously announced timetable for the crypto exemption policy this month. At a recent joint meeting with the CFTC, Atkins noted that uncertainties in the advancement of the crypto market structure bill could directly affect the effective timing of the exemption mechanism, and decisions need careful consideration. When asked about a specific launch date, he refused to commit to issuing a final rule this month or even next month.
Fully Incorporated into Securities Law Regulatory Scope, Tokenized Products Divided into Two Categories
Beyond regulatory issues, the legal status and regulatory applicability of tokenized securities have also not been clearly defined. To address this, Paul Atkins announced plans last November to establish a token classification method, based on the Howey Test, to clarify which crypto assets constitute securities and to define the crypto asset regulatory framework.
On January 28th, the SEC officially released guidance on tokenized securities, aimed at配合 (coordinating with) the market structure bill being advanced by U.S. legislators, providing a clearer regulatory path for market participants to conduct related businesses within the compliance framework.
The document clearly states that whether a security is regulated depends on its legal attributes and economic substance, not whether it is tokenized. Tokenization itself does not change the applicability of securities laws. In other words, merely putting assets on-chain or tokenizing them does not alter the scope of federal securities law application.
According to the SEC's definition, a tokenized security is a financial instrument presented in the form of a crypto asset, with ownership records maintained entirely or partially through a crypto network.
The document divides market tokenized security models into two core categories: issuer-sponsored and third-party-sponsored, clarifying regulatory requirements for each.
The first category is the Direct Issuer Tokenization Model: refers to the issuer (or its agent) directly using blockchain technology to issue and record holder information, whether using on-chain or off-chain records. Such tokenized securities must follow the same legal obligations as traditional securities, including registration and information disclosure;
The second category is the Third-Party Tokenization Model: divided into Custodial type, where token holders enjoy indirect ownership of the custodied securities through the token; and Synthetic type, which only tracks the price performance of the underlying security without transferring any substantive ownership or voting rights. Such products may constitute security-based swaps.
The document highlights the potential risks of third-party tokenized products, pointing out that this model creates additional counterparty risk and bankruptcy risk. Some products must be subject to stricter security-based swap regulatory rules.
The SEC also stated its "door is open," indicating it is ready to actively communicate with market participants on specific compliance paths to assist companies in conducting innovative businesses within the framework of federal securities laws.
As the SEC moves towards more detailed regulation of RWA, it will significantly reduce the risk of regulatory arbitrage and pave the way for more traditional institutions to enter the field.
