05-27-2026 
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America’s securities regulator is walking back plans to allow crypto operators to tokenize equities without the consent of the issuer, while the Trump family’s crypto ventures are having a moment of doubt and pain.
- SEC walks back tokenized equities plan
- SEC seeks public input on prediction market ETFs
- Trump Media sells more BTC, halts BTC ETF plans
- Trump-linked WLFI treasury firm warns it might not last another year
Last Friday, May 22, Bloomberg reported that the U.S. Securities and Exchange Commission (SEC) was pausing plans that would have allowed digital asset platforms to offer customers tokenized versions of publicly traded stocks, even if the actual issuers of those stocks object.
While that plan hasn’t been made public, Bloomberg previously reported that the SEC wanted to offer crypto platforms an ‘innovation exemption’ allowing them to offer third-party tokenized equities. Robinhood (NASDAQ: HOOD) and others began offering these tokenized equities last year, including for companies that hadn’t yet gone public, like ChatGPT developer OpenAI, despite that company publicly warning investors that it didn’t support this scheme.
Bloomberg said the SEC was now weighing input from “stock exchange officials and other market participants.” Among their concerns is how the SEC might enforce its requirement that third-party issuers offer holders the same rights as investors who bought actual stocks (dividends, voting rights, etc.) when these tokenized equities are traded by pseudonymous individuals on decentralized finance (DeFi) platforms.
NYU Stern School of Business professor Austin Campbell said companies would be hard-pressed to pay dividends to holders of tokenized equities “when you don’t know who owns the token, because it might be the North Koreans.”
Tokenization definitely has its supporters, who point to faster settlement times and 24/7 trading access. But Amanda Fischer, a former SEC chief of staff and current director at consumer watchdog group Better Markets, said corporate executives are likely “very concerned about the implications” of the tokenization plan.
Fischer tweeted that the SEC appears to believe that “capital markets exist for the intermediaries, not the companies raising money. We are going to see a lot more fragmentation and price dislocations between real and shadow stocks.”
Michael Burry, the legendary investor of ‘Big Short’ fame, used his Cassandra Unchained Substack to warn that “this may be the point in time that needs to be stopped from going forward by some future being.” Responding to a user comment, Burry added, “Regulators have one job. Do not open scary doors.”
As negative reaction to Bloomberg’s original report spread, SEC commissioner Hester Peirce tweeted that she “always expected that [the exemption would] be limited in scope & would facilitate trading only of digital representations of the same underlying equity security that an investor could purchase in the secondary market today, not synthetics.”
Peirce further clarified that her use of the word ‘synthetics’ was intended to distinguish “tokenized versions of issuer-sponsored stocks and of stocks that SEC-registered firms hold for their customers from synthetic instruments that provide exposure to stocks.”
The SEC’s current chairman, Paul Atkins, has largely taken a ‘see no evil’ approach to all things crypto. In this, the SEC has mirrored the Commodity Futures Trading Commission (CFTC), which under Trump’s second term has loosened restrictions on crypto operators while purging senior staff who dared to urge a more cautious approach.
Prediction market ETFs on hold
Tokenization isn’t the only ‘innovation’ on which the SEC is now pumping the brakes. On May 20, Atkins issued a statement regarding exchange-traded funds (ETFs) built around “novel products” such as prediction markets.
Atkins said, “Novel products raise novel questions, and I appreciate the willingness fund sponsors have shown in delaying the effectiveness of a number of novel ETFs, including event contract ETFs, while we consider the implications.”
These ‘event contract’ ETFs would differ significantly from funds that track other assets with floating values, like gold, oil, or BTC, in that they would pay out based on simple yes/no propositions, potentially leading to ‘investors’ losing their entire stake on a single event.
Two dozen event-based ETF applications were filed a couple of months ago, and with the SEC imposing new 75-day ‘fast-track’ rules last year, these applications would all have been automatically approved barring SEC intervention.
But with a host of U.S. states taking legal action against prediction markets that resemble online sportsbooks in everything but name, the SEC could easily find itself having to join the CFTC in defending these companies in court. Worse, the prediction platforms are also under fire for facilitating insider trading on military events, leading Congress to launch probes.
Atkins’ statement said that, in the interest of launching novel ETFs “in a transparent and thoughtful manner,” he’d instructed SEC staff to seek public input on what the introduction of these new products might mean for investors.
Trump Media folding, losing crypto hands
Congress took this week off, meaning no progress is being made on the lingering issues that could derail the Senate’s passage of its digital asset market structure legislation. Among these potential pitfalls is the ever-entertaining ‘ethics’ issue, aka how to limit or prohibit crypto profiteering by elected officials—including President Trump—and their families.
Depending on which estimate you trust, Trump and his family may have reaped nearly $1 billion from their highly controversial crypto businesses in the year after Donald returned to the White House in January 2025. Bloomberg recently declared that the Trump-linked World Liberty Financial (WLF) project is more important to the family’s finances than its Mar-a-Lago resort in Florida or the Trump Media & Technology Group (TMTG) (NASDAQ: DJT).
But not all appears well in Trump’s crypto paradise. TMTG’s share price is now down over 37% since the year began and off nearly 68% in the past 12 months. Its downward momentum has mirrored the decline of the BTC token, which has fallen nearly 40% since its $126,080 peak last October.
Last year, TMTG embarked on its ‘digital asset treasury’ strategy by paying nearly $1.4 billion for 11,542 BTC tokens at an average price of $118,522. As of March 31, TMTG reported having 2,000 fewer BTC on its balance sheet, having sold the tokens at an average price of $87,378.On May 21, Arkham Intelligence data showed TMTG transferring another 2,650 BTC to Crypto.com, the digital asset exchange with which TMTG has partnered on several crypto ventures. Given that BTC was trading at ~$77,000 at the time, selling those 2,650 tokens would push TMTG’s total net loss on its BTC holdings to date above $455 million.
That apparent fire sale came the same week that TMTG informed the SEC that it was scrapping plans to launch token-related ETFs using its Truth Social brand. The announcement, filed by TMTG’s ETF sponsor Yorkville America Digital, said only that it had decided “not to pursue the public offering at this time.”
TMTG’s ETF plans were announced last August, when BTC was on the rise. Yorkville issued a press release last week that called the ETF withdrawal “a proactive strategic decision” based on its view that it could offer “increasingly more innovative investment strategies” by withdrawing and refilling the applications under a different federal framework.
However, Bloomberg analyst James Seyffart tweeted that Yorkville’s explanation “doesn’t make a ton of sense to me.” Seyffart suggested the withdrawal had more to do with “the competitive landscape for spot Bitcoin ETFs,” including last month’s launch of Morgan Stanley’s (NASDAQ: MS) ultra-low fee MSBT.
Trump-linked crypto chameleon company’s problems never end
Another Trump-linked project, AI Financial Corporation (NASDAQ: AIFC), which before April 29 was known as ALT5 Sigma Corporation, informed the SEC last week that it suffered a net loss of $271 million in the first three months of 2026.
Even more alarming, the company suggested that its future existence was dependent on its ability to monetize its stack of 7.3 billion WLFI, the ‘governance’ token of the Trump family’s World Liberty Financial. AIFC acquired the tokens last August via a $1.5 billion deal with WLF, a deal critics slammed at the time as little more than a vehicle for WLF insiders to dump their WLFI bags on retail.
AIFC’s WLFI stash is now worth about 30% less than it was last August, and the company warned that current conditions “raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued.”
It might help if AIFC actually did something beyond stockpiling WLFI and selling shares to the unsuspecting public. While it claims to provide “next generation blockchain-powered technologies to enable a migration to a new global financial paradigm” (after equally unrewarding stints as an appliance recycling business and a biotech firm), its Q1 revenue totaled a mere $4.7 million, while its selling, general and administrative expenses were over $6.3 million.
On May 15, Eric Trump tweeted that he “intends to sue” MSNow reporter Jen Psaki after she questioned the optics of him accompanying his father on the president’s recent trip to China. Psaki raised the question of Eric’s apparent conflict of interest because AIFC is seeking a “potential deal with a Chinese computer chip manufacturer.” (Psaki cited Financial Times reporting on the proposed deal.)
Eric claimed he traveled to China “as a loving son who adores my father and wouldn’t miss being by his side for this incredible moment.” But it was Eric’s claim that “I have NEVER been on the board of ALT5—not now, not ever” that many found even less convincing.
Eric himself celebrated his ALT5 director status via a (since deleted) tweet last August. Eric’s ‘never’ claim may technically hold a grain of truth, because while ALT5 told the SEC last August that it was appointing Eric to its board, Nasdaq officials quickly expressed concerns over ALT5’s close ties with WLF, which lists Eric as a co-founder.
Eric’s ALT5 director role was subsequently downgraded to ‘observer,’ a shift that Eric tweeted acknowledgement of last September. Meanwhile, the company completely scrubbed Eric’s name from their site at some point in the past couple of months.
ALT5 underwent a turbulent and extended executive shuffle that started shortly after its WLF deal, losing three CEOs in a six-week span, along with several other C-suite execs, all of whom left under unclear circumstances. On August 27, ALT5 informed the SEC that one of its subsidiaries had been found guilty of “illicit enrichment and money laundering” by a Rwandan court and ordered to fork over $3.5 million.
Last December, Nasdaq informed the company that it had been placed on its ‘noncompliant’ list after failing to file its Q3 financial report card with the SEC. ALT5 eventually filed the report on January 12, reporting an operating loss of $16.5 million.
Since the year began, AIFC/ALT5’s share price has fallen by one-third, and it is down nearly 92% over the past 12 months. AIFC’s shares closed Tuesday down 10.4% to $0.80, below the $1 mark that Nasdaq requires companies to stay above or face delisting. Whatever name it goes under, AIFC/ALT5 just seems to spell trouble.
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