Former New York Governor Cuomo says tokenization has outpaced US regulation and more regulatory clarity is needed.

PANews reported on September 25 that Andrew Cuomo, the former New York State governor and an OKX board member, wrote in CoinDesk that tokenization is developing faster than U.S. regulation and the legislative process. In his view, regulatory clarity is not only a legal and political question. It will also influence where investment, talent, and financial infrastructure go. The piece centers on a step taken by the U.S. Securities and Exchange Commission, known as the SEC, on September 17: a temporary “innovation exemption” that creates a limited regulatory testing framework for trading tokenized U.S. stocks on eligible on-chain venues.

Why Regulatory Clarity Matters

Tokenization generally refers to representing assets as digital tokens on a blockchain. For traditional equities, the question is not only whether shares can be moved onto a digital rail, but whether the resulting tokens carry the same rights and expectations as the underlying stock. Cuomo’s argument is that market experimentation is already moving faster than rule-making. When rules are unclear, participants may look for jurisdictions where compliance is more predictable. That can affect investment flows, hiring, and the location of financial infrastructure.

What the SEC Exemption Allows

The SEC’s September 17 measure is described as an innovation exemption. It permits qualifying on-chain trading venues to trade tokenized U.S. stocks under specified conditions. The article presents this as a regulatory experiment rather than a permanent change to securities law. It gives traditional capital markets a controlled way to test on-chain trading of stock-like assets while regulators assess what rules may be needed as the market matures.

The exemption is temporary, with a five-year validity period. That limited window matters because it signals that the regulator is allowing innovation under conditions that can be reviewed, adjusted, or withdrawn as practice develops. It also gives issuers, exchanges, and technology providers a defined time frame in which to build or test systems.

Conditions That Limit the Experiment

According to Cuomo’s account, the framework is not open-ended. Trading venues must use a licensed participation mechanism, meaning access is controlled rather than fully permissionless. The exemption also limits the number and scale of tokenized stock trades, keeping the experiment bounded.

Holder rights are central. Tokenized stocks must provide holders with the same rights and treatment as the corresponding traditional stocks. This requirement is meant to prevent a digital token from becoming a lower-quality claim on the underlying asset. The smart contracts involved must be auditable and deployed on public blockchains, adding transparency requirements to the technical layer.

The report excerpt does not complete the list of conditions, so the full compliance package should be read from the SEC and CoinDesk sources rather than inferred.

What Readers Should Watch Next

The next question is whether the five-year window leads to broader rules or remains a narrow pilot. Market participants will watch how eligible venues participate, how the limits operate in practice, and whether the legislative process catches up with tokenized stock trading. Cuomo’s broader point is that regulatory clarity may shape the direction of investment, talent, and financial infrastructure more than the underlying technology itself.

The article does not provide a price forecast or investment thesis. It frames the SEC exemption as a regulatory signal: tokenization may move faster than legislation, but the rules that govern tokenized stocks will determine whether traditional finance can shift on-chain with confidence.