SEC Grants 5-Year Exemption for Tokenized Stock Trading

The U.S. Securities and Exchange Commission issued an order on 17 September 2026 that lets a new class of venue trade tokenized shares of ordinary American stocks on a blockchain. Announced as press release 2026-90, the order — the agency calls it the “Innovation Exemption” — uses the SEC's exemptive authority under Section 36(a)(1) of the Securities Exchange Act of 1934 to grant two forms of temporary, conditional relief. First, it exempts Tokenized Securities Venues, or “TSVs”, from the Act's definition of an “exchange”. Second, it exempts certain liquidity providers, which the order calls “Covered Firms”, from the definition of a “dealer”. Both exemptions are set to expire five years after publication.

The Commission moved after a legislative route stalled. In his own statement, SEC Chairman Paul S. Atkins wrote that the agency launched “Project Crypto” a little over a year ago to move US markets onchain, and that “earlier this week, Congress was unsuccessful in advancing the CLARITY Act”. The order, he said, is the SEC acting “within its statutory authority” in the meantime: “Today, the Securities and Exchange Commission is taking a significant step forward ... to bring America's capital markets into the digital age.” Jamie Selway, director of the SEC's Division of Trading and Markets, called the approval “an important milestone” and said the division “stands ready to work with interested parties seeking to operate a TSV”.

The relief is deliberately narrow, and the conditions are where the practical detail sits. Per the SEC, tokenized NMS stock on a TSV faces limits on both the number of symbols and the volume traded — calibrated by limit up, limit down tiers, according to Commissioner Mark T. Uyeda. A TSV must verify that the token carries the same rights and privileges as the equivalent traditional share; Atkins listed dividends and voting rights among them. Trading in a token must stop at the same time the underlying stock is halted on its primary listing exchange. Smart contracts a TSV uses must be auditable, public and deployed on a public, permissionless distributed ledger. Before listing a stock tokenized by an unaffiliated third party, a TSV must give the issuer written notice and a chance to object. Uyeda said dollar transaction data — price, size, time, pool address, end-of-day pool size and daily volume — will be published at regular intervals.

Several things are still open. The SEC has not named any firm that plans to operate as a TSV, and the press release does not state a deadline for the public comment it is soliciting; the order is to be published on SEC.gov and in the Federal Register. Atkins was explicit that this is a bridge, not a destination: the interim measure, he wrote, “must be followed by durable rulemaking to ensure that onchain markets remain a viable pathway”. The SEC also stressed that anti-fraud and anti-manipulation provisions of the federal securities laws apply in full to these markets.

This article is for information only and is not investment advice.