SEC's 'Innovation Exemption' opens a five-year on-chain window for tokenised US stock trading
SEC’s ‘Innovation Exemption’ opens a five-year on-chain window for tokenised US stock trading #
The U.S. Securities and Exchange Commission has issued an order creating a temporary regulatory pathway for publicly traded American stocks to be traded in tokenised form on blockchain-based venues, effective immediately.
Announced on September 17, 2026, the order, officially called the “Innovation Exemption,” creates a new category of platform called Tokenized Securities Venues, or TSVs. Under the Securities Exchange Act of 1934, any platform that matches buyers and sellers of securities must register as an exchange. The SEC’s order conditionally frees qualifying TSVs from that obligation for five years, giving the industry room to operate while the Commission develops permanent rules.
TSVs will be permitted to match buyers and sellers of tokenised National Market System (NMS) stocks through permissioned automated market makers and liquidity pools, a mechanism more common in decentralised finance than in traditional equity markets. The order also extends a parallel conditional exemption to liquidity providers operating within those pools, relieving them of obligations that would otherwise apply under the Exchange Act’s definition of a “dealer.”
The exemption includes conditions to preserve investor protections and market integrity. TSVs must be incorporated in the United States and maintain a domestic office. Anonymous trading is prohibited. Smart contracts underpinning the platforms must be publicly auditable and deployed on permissionless distributed ledgers. Venues must also cap the number of symbols listed and the volume traded, calibrated to existing limit-up/limit-down tiers.
Tokenised shares listed on a TSV must confer the same rights as the equivalent traditional shares, including voting rights, dividends and participation in corporate actions. That provision explicitly excludes derivative products that merely track a stock’s price. Before listing any company’s shares, a TSV must give the issuer 30 days’ written notice; if the issuer objects within that window, the platform is barred from listing the token. TSVs must also synchronise trading halts with the primary listing exchange whenever an underlying stock is suspended.
SEC Chair Paul Atkins framed the move as a structured first step under the agency’s “Project Crypto” initiative, launched last year to modernise U.S. capital market infrastructure for the blockchain era. His statement described the exemption as “a bridge toward durable rulemaking” rather than a permanent resolution of the regulatory questions involved. The order simultaneously solicits public comment on all aspects of the relief and invites views on what further steps, including formal rulemakings or legislative changes, may be needed.
The order came two days after the Senate failed to advance the CLARITY Act, a crypto market-structure bill that fell short of the 60 votes needed to proceed. With Congress unable to deliver a statutory framework, the SEC acted within its existing authority to allow on-chain equity activity to begin and to bring offshore tokenised-stock platforms back into a U.S. regulatory perimeter.
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