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The U.S. Securities and Exchange Commission's (SEC) is being criticized for allegedly letting cryptocurrency companies bypass market and stock exchange rules.

The criticism comes from a group of stock exchanges that sent a letter to the Wall Street regulator urging it to hold crypto companies to account and warning of harms for investors.

Several companies plan to sell cryptocurrency tokens linked to listed equities to investors who want exposure to stocks without owning them directly, a process known as "tokenization."

But to sell the products in the U.S., crypto companies that are not registered as broker-dealers need the SEC to give them an exemption.

SEC Chair Paul Atkins has said the agency is working on crafting an "innovation exemption" from securities laws that would enable crypto companies to "experiment with new business models."

The World Federation of Exchanges (WFE), a group whose members include the U.S. Nasdaq (NASDAQ: $NDAQ ) and Germany's Deutsche Boerse, say in a letter that such an exemption could create market risks and harm investors.

"The SEC should avoid granting exemptions to firms attempting to bypass regulatory principles that have safeguarded markets for decades," reads the letter.

The SEC published the letter on its website but has not commented on it.

Under U.S. President Donald Trump, the SEC has overhauled its approach to crypto in what's being called a victory for digital assets.

However, a growing number of market advocacy groups are warning that the SEC's approach to crypto is too lax and could ultimately spell disaster for U.S. markets and investors.

For their part, issuers of tokenized stocks say that integrating the blockchain technology that underpins cryptocurrencies into equity markets could make trading more efficient and cheaper.

Bitcoin (CRYPTO: $BTC ) is currently trading at just below $91,000 U.S.