The rivalry between stock exchanges and their emerging rivals, crypto trading exchanges, recently came to the forefront when the former raised concern over the U.S. Securities and Exchange Commission (SEC) easing rules for the latter.
While the majority of traders still opt for stock exchanges due to their long-standing operations, a significant number of traders have embraced crypto exchanges of late due to their global access.
Related: Nasdaq seeks SEC approval to boost Bitcoin ETF options limits
Over the past few months, several crypto exchanges have launched tokenized versions of stocks and the new SEC administration under Chair Paul Atkins, unlike his predecessor Gary Gensler, is perceived to be sympathetic to the new offerings from crypto platforms.
The stock exchanges, still the stronghold of traditional investing, are hardly pleased and have sent a letter to the regulatory body.
Tokenization is the process of leveraging blockchain technology to represent real-world assets (RWAs) like stocks, funds, real estate, etc. as digital tokens.
Tokenized stocks are blockchain-based digital representations of traditional company stocks. These tokens provide indirect stock exposure to investors who don’t want to or can’t own real shares trading on stock exchanges.
Unlike traditional stocks, tokenized stocks trade 24/7 and offer fractional ownership of assets to traders.
Related: What is tokenization? Explained
In April, the SEC said it was weighing a framework that would give time-limited exemptive relief to crypto exchanges offering tokenized stocks as part of the broader pro-crypto agenda.
Last month, Chair Paul Atkins hinted that the regulator is preparing to formulate an “innovation exemption” to let crypto firms operate under formal regulatory oversight.
When Robinhood Markets (Nasdaq: HOOD) launched tokenized stocks in the U.S., it caused enough controversy. But once the new rules and regulations get implemented, tokenized equity offerings by crypto exchanges could gain regulatory recognition.
Stocks exchanges have registered their protest over the development, saying it could harm investor interest.
The World Federation of Exchanges counts Nasdaq, Cboe, and CME Group, among its members.
On Nov. 21, the federation wrote to the SEC to reconsider the potential exemptions it is planning to grant to crypto exchanges offering tokenized stocks.
The group of stock exchanges said exemptive relief that “dilutes” investor protections offering by securities laws or “distorts” competition via selective advantages will have negative and acute consequences for U.S. markets.
The federation expressed its reservation about granting exemptive relief to fast-track crypto exchanges into stock markets without requiring full compliance.
This story was originally published by TheStreet on Nov 27, 2025, where it first appeared in the Policy section. Add TheStreet as a Preferred Source by clicking here.