Blockchain Legal Resource

On September 17, 2026, the US Securities and Exchange Commission (SEC) announced the issuance of an exemptive order to facilitate trading in certain tokenized securities. The SEC’s “Innovation Exemption” is scheduled to expire in five years and, in the interim, is intended to promote experimentation with securities tokenization that could lead to future SEC rulemaking.

More specifically, the Innovation Exemption is designed to facilitate trading of tokenized national market system (NMS) stocks through automated market makers and liquidity pools on public blockchains. The relief is intended to permit potential benefits such as self-custody, around-the-clock trading, fractional ownership, and faster settlement while preserving investor protections and fair, orderly markets.

The order excludes qualifying tokenized securities venues (TSVs) from the Securities Exchange Act definition of an “exchange.” It also provides conditional relief from the definition of “dealer” for certain liquidity providers, known as Covered Firms. Eligible tokenized NMS stocks include shares tokenized by or on behalf of the issuer, as well as shares tokenized by an unaffiliated third party; tokens that provide only synthetic exposure to a stock are not covered.

The relief is subject to several conditions, limits, and disclosure obligations. Trading on a TSV must comply with symbol and volume caps, and the TSV must confirm that tokenized shares provide the same rights as the corresponding traditional shares. Smart contracts must be public and auditable, and the TSV must disclose information about its operations and trading. Before offering a third party’s tokenized stock for trading, the TSV must notify the underlying issuer and provide an opportunity to object.

Before beginning operations, a TSV must post a public notice at least 30 calendar days in advance and notify the SEC within one business day after posting. Covered Firms must likewise notify the SEC and provide required public disclosures. The order also seeks public comment on potential modifications to the relief and possible future regulatory action.