The Securities and Exchange Commission has pushed back a proposed plan to allow onchain stock trading, a move that had been seen as a bridge between traditional finance and crypto markets. Wall Street firms are pushing back hard against the crypto exemptions embedded in the plan, arguing they could create regulatory loopholes.
What the SEC delayed
The plan, which would have let certain stocks trade on blockchain rails, was widely expected to move forward this quarter. Instead, the SEC announced a delay this week, citing the need for more public comment and a closer look at how crypto exemptions would work in practice.
Wall Street's pushback has been the main roadblock. Major banks and brokerages have told the SEC that exempting crypto assets from standard settlement and custody rules could weaken investor protections. They want the crypto-specific parts stripped out before the plan gets a green light.
Why Wall Street is fighting it
For traditional finance firms, the stakes are high. If the SEC approves a version that treats crypto differently, it could create a two-tier system — one set of rules for stocks on blockchains that use crypto tokens, another for everything else. That, they argue, would be a nightmare for compliance and risk management.
On the other side, crypto advocates say the exemptions are what make the plan innovative. Without them, the onchain trading system would just be a more expensive version of the existing one.
What this means for onchain stocks
The delay throws cold water on hopes that onchain stock trading would get a regulatory green light this year. Several exchanges had already started building infrastructure, expecting the SEC to move quickly. Now they're stuck waiting — and watching whether Wall Street can kill the exemptions entirely.
The timing isn't great for the broader crypto industry. With the SEC slowing down on several fronts, the message is clear: the agency isn't ready to let crypto rewrite securities trading rules just yet.
What comes next
The SEC has opened a new comment period, giving both sides a chance to make their case. Wall Street firms are expected to file detailed objections in the coming weeks. Crypto companies will likely counter with their own arguments.
The real question is whether the SEC tries to salvage the plan by removing the crypto exemptions — which would effectively kill the onchain aspect — or stands its ground. A decision could come this fall, but the delay suggests the agency is in no rush.
