SEC Trading and Markets Director Jamie Selway: Asset Tokenization and Cryptocurrency Have Been Politicized, But Tokenization Should Receive Bipartisan Support
Jamie Selway, Director of the Trading and Markets Division of the U.S. Securities and Exchange Commission (SEC), stated that asset tokenization and cryptocurrency have been politicized, but the development of these markets should receive bipartisan support from both Democrats and Republicans. He emphasized, "We want this country to win the tokenization competition."
Selway's remarks come in the wake of a setback for cryptocurrency legislation in Congress. The crypto market structure bill, the CLARITY Act, received only 49 votes in a procedural vote in the Senate, falling short of the 60 votes needed to advance. Republicans accused Democrats of deliberately delaying, while some lawmakers expressed concerns about members of the Trump family profiting from crypto projects; both Trump and the White House denied any conflict of interest. The bill was intended to delineate the regulatory boundaries between the SEC and the Commodity Futures Trading Commission (CFTC) regarding securities, commodities, and stablecoins.
The day after the legislative failure, the SEC exercised its administrative exemption authority to issue an "innovation exemption," allowing tokenized U.S. National Market System stocks (NMS stocks) to trade on-chain in secondary markets for a trial period of five years. SEC Chairman Paul Atkins stated that although Congress failed to advance the CLARITY Act, the SEC is taking significant steps "within its statutory authority." Selway described this approval as an "important milestone" in opening capital markets.
The exemption created a new type of trading venue called a "Tokenized Securities Trading Venue" (TSV). These venues do not need to register as national securities exchanges and can facilitate trades using smart contracts, automated market makers (AMMs), and software-managed liquidity pools, replacing traditional order books. Trading software must be open, auditable, and deployed on a public permissionless blockchain, but access to the trading venue requires permission. Tokenized stocks must have the same voting rights and dividend rights as the original stocks; if trading of the original market is paused, the tokenized version automatically pauses as well; synthetic products that only track prices are excluded from the exemption; and the use of leverage and borrowing in trades is prohibited.
In terms of scale, the exemption sets strict tiered limits. The first tier includes the most liquid stocks, with a maximum of 75 stocks per trading venue and a trading volume limit of 0.25% of the stock's average daily trading volume. For Tesla, with an average daily volume of about 40 million shares, approximately 100,000 tokenized shares could be traded daily. The second tier allows for a maximum of 250 stocks, with a trading volume limit of 2.5% of the average daily volume. Companies whose stocks are tokenized by third parties will receive a 30-day notice and have the right to veto the listing on a particular trading venue. Some institutions providing liquidity for AMMs may be conditionally exempt from dealer registration requirements.
Selway established the principle for SEC's tokenization regulation as "innovation without arbitrage": tokenized securities are subject to the same rules as traditional securities, receiving neither special privileges nor additional penalties. He previously proposed coordinating rules with the CFTC in three areas: swap reporting, portfolio margining, and product definitions. Meanwhile, CFTC Chairman Mike Selig also stated that he would continue to advance crypto policy using existing powers.
From a market mechanism perspective, this is a policy-driven event, shifting the regulatory path from "waiting for Congress to legislate" to "regulatory agencies advancing through administrative exemptions first." The direct beneficiaries are institutions preparing to establish on-chain stock trading venues: Robinhood and Kraken, which have already tested tokenized stocks in Europe, as well as tokenization infrastructure providers like Coinbase, Securitize, Ondo, and Nasdaq, which is laying out on-chain settlement with the U.S. Securities and Exchange Commission (DTCC). In terms of funding, U.S. stock market liquidity is expected to partially migrate to a 24/7 on-chain market, but strict trading volume limits mean early scale will be limited. Offshore platforms relying on synthetic tokenized stocks to serve overseas users are under pressure, as synthetic products are excluded; at the same time, the exemption relies on administrative power rather than law, posing a political risk of being revoked if the SEC leadership changes in the future.
Source: Public Information
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The SEC's attitude towards the crypto industry has completely reversed in two years. Under Chairman Gary Gensler, the SEC pursued "enforcement-based regulation": suing Ripple in 2020, followed by lawsuits against Coinbase and Binance in June 2023, and making it difficult for banks to custody crypto assets with accounting announcement SAB 121. After the Trump administration took office in early 2025, the SEC rescinded SAB 121, withdrew lawsuits against companies like Coinbase, and Paul Atkins became chairman in April 2025, launching "Project Crypto" in July of the same year. In the same month, Trump signed the stablecoin bill, the GENIUS Act, and the House passed the CLARITY Act with a vote of 294 to 134. However, the deep involvement of the Trump family in the crypto business, including World Liberty Financial, USD1 stablecoin, and $TRUMP meme coin, transformed crypto legislation from a technical issue into a partisan issue, which was a key reason the CLARITY Act stalled in the Senate.
From a capital path perspective, Wall Street has already laid out tokenization in advance. BlackRock launched the tokenized currency fund BUIDL in March 2024, quickly reaching several billion dollars in scale. In June 2025, Robinhood launched tokenized U.S. stocks based on Arbitrum in Europe, and Kraken launched xStocks. In September of the same year, Nasdaq submitted an application to the SEC for tokenized securities trading; in December, DTCC received a no-objection letter from the SEC to start a tokenized custody pilot. The logic driven by institutions is clear: on-chain settlement can shorten T+1 to real-time, releasing a large amount of settlement margin and capital occupation; 24/7 trading can attract global retail investors; and smart contracts can compress the costs of clearing and custody in these intermediate links.
The closest historical analogy is the alternative trading system rule (Reg ATS) introduced by the SEC in 1998. At that time, electronic communication networks (ECNs) like Island and Archipelago were allowed to facilitate stock trading without registering as exchanges, quickly capturing market share from the NYSE and Nasdaq. The final outcome was a reverse integration: in 2005, Nasdaq acquired Instinet, and in 2006, the NYSE completed its listing by acquiring Archipelago, with traditional exchanges absorbing new technologies. The national market system rule (Reg NMS) in 2005 further opened up electronic competition. The TSV framework introduced by the SEC this time is essentially the on-chain version of the "ATS moment": using capped exemptions to allow new trading venues to get started. The industry is currently in the early stage of "regulatory sandbox pilot, with traditional giants competing alongside crypto-native platforms."
Essentially, this is a regulatory change. The mechanism behind it is that congressional legislation requires 60 votes in the Senate, which is nearly impossible to achieve in a highly partisan environment; while the SEC, based on Section 36 of the Securities Exchange Act of 1934, has administrative exemption authority, allowing it to greenlight specific market structures without amending the law. Thus, the focus of rule-making has shifted from the legislative body to regulatory agencies. The advantage of this path is speed and the ability to control risks with limits; the disadvantage is the lack of legal permanence, as administrative exemptions can be revoked by the next SEC. This is precisely why Selway emphasizes "bipartisan support": only with cross-party consensus can the infrastructure investment in the tokenization market have certainty that transcends political cycles.
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