Bullish, Coinbase, and Circle were among the names lower on Friday after the regulatory setback.

• Shares of tokenization-focused firms including Bullish (BLSH), Figure (FIGR), Coinbase (COIN) and Circle (CRCL) slipped Friday as the SEC delayed its planned “innovation exemption” for tokenized securities and canceled meeting on proposed crypto offering rules.
• Uniswap’s UNI dropped 7% leading CoinDesk 20 index losses, as the exemption was expected to provide relief for trading securities on DeFi venues.
• The regulatory setback is a “speed bump” for tokenization and may lengthen adoption, but does not derail momentum behind tokenized assets and 24/7 trading infrastructure, Clear Street managing director Owen Lau said.

Tokenization-related stocks slid Friday after another delay to a long-awaited U.S. regulatory initiative weighed on investor sentiment towards the industry's expansion into traditional securities.

Securitize (SECZ), BlackRock's tokenization partner and issuer of the BUIDL tokenized Treasury fund, was down 5% earlier in the session before it reversed losses, stabilizing after Thursday’s 27% plunge on missing earnings estimates.

The moves followed CoinDesk's report late Thursday that the Securities and Exchange Commission (SEC) was set to further delay its anticipated “innovation exemption,” which is expected to make it easier for companies to offer trading in tokenized securities. Concerns from the White House and Wall Street over the proposal's legal footing and potential market impact have held up the plan.

Adding to the uncertainty, the SEC canceled a meeting scheduled for Friday where commissioners planned to consider whether to propose new rules creating a tailored offering regime for certain investment contracts involving crypto assets.

The impact wasn't limited to stocks. The innovation exemption had also been expected to provide some regulatory relief for trading through decentralized finance venues, meaning the delay reaches beyond publicly traded tokenization companies. Uniswap's UNI (UNI), the native token of the decentralized exchange, fell 7% over the past 24 hours, making it the weakest performer in the CoinDesk 20 Index both Friday and this week.

For comparison, the Nasdaq 100, S&P 500 and bitcoin

A ‘speed bump,’ not the end of the tokenization trade

The setback could stretch out the timeline for U.S. tokenization, but it doesn't necessarily change the longer-term story, according to Owen Lau, managing director and senior analyst at Clear Street.

“The tokenization theme hits a speed bump, but it doesn't alter the underlying momentum,” Lau said.

Coinbase and Bullish are already looking for ways to offer tokenized equities, while traditional exchanges including Nasdaq and the New York Stock Exchange are developing infrastructure for round-the-clock trading, Lau noted.

The bigger question is how quickly regulators allow those plans to move forward. The latest delay, particularly amid questions surrounding the CLARITY Act and the SEC's legal authority, could lengthen the adoption curve of tokenization, Lau added.

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