On Sept. 17, 2026, the U.S. Securities and Exchange Commission issued an order granting temporary, conditional relief for the on-chain secondary trading of tokenized National Market System (NMS) stocks. The “Innovation Exemption” provides qualifying Tokenized Securities Venues (TSVs) with a five-year exemption from the definition of “exchange” under the Securities Exchange Act of 1934, as amended (the Exchange Act). The order also provides related relief from the Exchange Act definition of “dealer” for certain proprietary liquidity providers.
The order permits a TSV to facilitate trading through permissioned automated market makers and liquidity pools (AMM Liquidity Pools) deployed through auditable smart contracts on a public, permissionless blockchain. The relief is subject to conditions addressing participant access, issuer notice and objection rights, token-holder rights, trading limits, transaction transparency, operational events, public disclosures, books and records, and SEC oversight.
The relief is meaningful but narrow. It does not create a general exemption for tokenized securities, permit primary offerings through a TSV, displace Securities Act registration requirements, or relieve broker-dealers and other regulated participants from requirements that otherwise apply to their activities. The exemptions expire on Sept. 17, 2031.
The order follows earlier Commission and staff actions concerning tokenized securities. As discussed in our August 2026 GT Alert addressing SEC staff no-action relief for digital asset custody, the Commission had been considering an innovation exemption intended to facilitate certain tokenized securities activity. The order now establishes the conditions for one specific form of secondary trading while the Commission considers whether further rulemaking or other relief is appropriate. The Commission is accepting comments under File No. 4-927 but has not specified a comment deadline.