SEC Innovation Exemption Opens On-Chain Trading For 75 Tokenized Stocks

The U.S. Securities and Exchange Commission issued its long-awaited "Innovation Exemption" order on Sept. 17, 2026, granting temporary, conditional relief for the on-chain secondary trading of tokenized National Market System stocks. The order provides qualifying Tokenized Securities Venues with a five-year exemption from the definition of "exchange" under the Securities Exchange Act of 1934, and related relief from the "dealer" definition for certain proprietary liquidity providers.

The relief permits a TSV to facilitate trading through permissioned automated market makers and liquidity pools deployed through auditable smart contracts on a public, permissionless blockchain. The order does not create a general exemption for tokenized securities, does not permit primary offerings through a TSV, and does not displace Securities Act registration requirements.

Tier 1 tokenized stocks are limited to 75 symbols and 0.25 percent of the prior month's average daily share volume for the relevant stock. The order follows the SEC's approval in March 2026 of Nasdaq's tokenized stock rules and similar rules passed at the New York Stock Exchange in April 2026.

The five-year window ending Sept. 17, 2031 gives the industry a defined period to build compliant infrastructure while the SEC considers whether further action is warranted.