Former New York Governor Andrew Cuomo emphasizes that regulatory clarity is an economic issue, not just a legal or political one.
By Andrew Cuomo|Edited by Cheyenne LigonSep 25, 2026, 10:37 a.m. EDT5 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred onJust three months ago, the idea of integrating U.S. stocks into blockchain markets seemed more like a distant possibility than an immediate market reality. However, this changed on September 17, when the Securities and Exchange Commission (SEC) introduced a temporary framework for limited trading of tokenized U.S. stocks on approved on-chain platforms. This move represents a significant shift from speculative to regulated trading of tokenized assets. As co-chair of a joint venture between the Intercontinental Exchange, which owns the New York Stock Exchange, and OKX, I have closely observed this transition.
The SEC's new “Innovation Exemption” establishes a temporary framework allowing qualified platforms to trade certain tokenized stocks from American exchanges without needing SEC registration. This exemption, which lasts for five years, enables experimentation with blockchain trading, while implementing safeguards to protect investors.
This development is noteworthy, but its broader implications highlight the speed of technological advancement.
The conversation has shifted from whether blockchain will penetrate traditional capital markets to how these markets will adapt and what regulations will govern this evolution.
Andrew Cuomo is the former Governor of New York, and a board member of OKX.
Tokenization does not eliminate the inherent risks in finance or render regulatory responsibilities irrelevant. In fact, it underscores the necessity for trust in markets; new technologies can only thrive when investors believe in the authenticity of ownership, reliability of transactions, fairness of markets, and accountability for misconduct.
I learned this lesson firsthand during my tenure as New York Attorney General amid the financial crisis, witnessing how rapid innovation outpaced regulatory oversight and risk management. The promotion of subprime lending and complex mortgage securities as innovations intended to broaden credit access instead led to widespread risk dissemination due to poor underwriting and insufficient protections.
The takeaway was not to halt financial innovation but to ensure that it evolves concurrently with regulation.
This appears to be the strategy the SEC is now adopting.
The new exemption is not an unrestricted opportunity. All participants in trading venues must be authorized, and tokenized shares must offer investors the same rights as traditional shares. There are limits on the number of tokenized securities traded, and issuers can object to the trading of their shares by unrelated third parties. Additionally, smart contracts must be auditable and hosted on public blockchains, and tokenized security trading must cease if trading of the underlying security is paused.
This regulatory approach acts as a testing ground: allowing innovation within established parameters, observing technology performance, and using those insights to shape future regulations.
SEC Chairman Paul Atkins characterized the exemption as a “bridge toward durable rulemaking,” a significant point since it is not intended as a permanent regulatory solution.
Two days before the SEC's decision, the limitations of the current regulatory environment became evident. On September 15, the Senate did not advance the Digital Asset Market Clarity Act, with the cloture motion receiving only 49 votes, falling short of the three-fifths majority needed. This proposed legislation aimed to create a comprehensive legal framework for digital assets and clarify the roles of the SEC and Commodity Futures Trading Commission.
Disagreements over the bill were substantial, touching on consumer protection, banking practices, ethics, illicit finance, and the powers of federal regulators. These discussions are crucial.
Nonetheless, the underlying technology and the markets surrounding it will continue to progress regardless of the legislative timeline.
During recent meetings with regulators and financial market participants in Europe, I was reminded of these challenges. European policymakers face similar issues to those in the U.S.: How to foster innovation without undermining market integrity? How do existing rules apply to decentralized technologies? And how swiftly can regulators adapt without causing instability?
Europe has not resolved all its issues. Its own trials with distributed-ledger market infrastructure have faced obstacles. However, the European Union has created unified regulatory frameworks and is learning from their application.
This is significant because both capital and technology are inherently mobile.
Financial institutions investing in long-term infrastructure prioritize regulatory substance but also value predictability. Companies need to understand the rules they will operate under when deciding where to invest, build trading systems, develop products, and allocate capital. Clear, stringent regulations can be planned around, while ongoing uncertainty complicates pricing.
This underscores why regulatory clarity is not merely a legal or political matter; it is fundamentally an economic issue.
Jurisdictions that create credible and predictable regulatory environments are better positioned to attract investment, talent, and financial infrastructure, while those that remain indecisive risk losing out as standards and markets evolve elsewhere.
The SEC's recent actions help mitigate some of that uncertainty in the U.S. and do so thoughtfully. However, they also reveal an institutional reality: agencies operate within the limits of the authority granted by Congress. Exemptions can expire, regulations can change, and statutes provide a more stable framework.
This distinction will become increasingly important as tokenization expands.
The potential uses for this technology are vast. Distributed-ledger technology could revolutionize how securities are issued, transferred, traded, settled, and recorded, potentially lowering transaction costs, enhancing transparency, and improving liquidity, especially in traditionally illiquid markets.
However, these benefits are not guaranteed. The technology must demonstrate its effectiveness, and investor protection must remain a priority.
Historical trends suggest that when technology can streamline processes, reduce costs, enhance transparency, or improve accessibility, markets will seek to implement it. Electronic trading transformed Wall Street, and mobile technology reshaped banking. Tokenization could be yet another transformative shift.
The SEC has now opened the door to explore these possibilities.
What unfolds next in markets, regulatory agencies, and Congress will shape not only the rules for this new financial technology but also dictate where investments occur, where infrastructure develops, and which jurisdictions will set the standards for the future of capital markets.
The pace of technological change is rapid. The pressing question remains whether the United States can establish a regulatory framework robust enough to keep pace with it.
Note: The opinions expressed in this article are those of the author and do not necessarily represent the views of CoinDesk, Inc. or its affiliates.