Securitize's Redfearn says SEC held back crypto innovation exemption over Clarity Act politics

Securitize President Brett Redfearn said the Securities and Exchange Commission delayed its planned innovation exemption for tokenized securities because releasing it could have complicated efforts to secure votes for the Clarity Act.

Redfearn said the exemption had been expected on Aug. 14 but was pulled back as lawmakers worked to line up support for the market structure bill. The SEC proposed its separate Regulation Crypto Assets rule on Aug. 18.

"I think it could have messed with some of their clarity politics," Redfearn told The Block's Kelvin Sparks at the Wyoming Blockchain Symposium. "If you're in a world where you're trying to line up the votes to get Clarity across the line, you don't want to mess with clarity politics."

Redfearn expects the innovation exemption to come after the Clarity Act, "probably early October." He said it is expected to cover tokenized securities traded through a new type of venue that would not require a broker-dealer, registered alternative trading system (ATS), or exchange.

"We could actually have DeFi, like, on-chain trading without necessarily having broker-dealers, without having sort of a registered alternative trading system or exchange involved," Redfearn said.

However, the possibility of the SEC's rule by Redfearn's timeline is still tied to the Clarity Act's uncertain path through the Senate. Majority Leader John Thune has scheduled a cloture vote for Sept. 15, after the Senate missed a vote before its August recess.

Redfearn said the exemption could also face a court challenge from traditional financial intermediaries, potentially tying it up for about two years.

Securitize has built its tokenized securities business within existing securities laws, he said, including through a registered transfer agent and an ATS. The company also trades its SECZ shares onchain under Regulation NMS and complies with the Consolidated Audit Trail.

"If we don't get Clarity, it's disappointing, but we'll be fine," Redfearn said.

Securitize began trading publicly on July 2 and has close to $400 million in its coffers, according to Redfearn. The company is using the capital to expand its infrastructure for tokenized securities, including an equities trading platform being developed with the New York Stock Exchange and partnerships with ComputerShare, Continental, and Jump Trading.