SEC grants a five-year innovation exemption for on-chain trading of tokenized NMS stocks

What changed

The SEC granted temporary conditional relief, effective September 17, 2026 through September 17, 2031, allowing qualifying Tokenized Securities Venues to operate permissioned AMM liquidity pools for tokenized NMS stocks without registering as national securities exchanges and allowing qualifying proprietary liquidity providers to rely on a related dealer exemption. Eligible tokenized stocks must preserve the rights of the corresponding traditional shares; permitted trading pairs may include another tokenized NMS stock, a non-security crypto asset, or a tokenized money-market fund. The order imposes conditions covering participant permissioning, OFAC compliance, public and auditable smart contracts, issuer objections, symbol and volume limits, coordinated trading halts, records, disclosures, notices, and Commission oversight, while soliciting comment on possible modifications and durable rules.

Who it affects

• Operators considering Tokenized Securities Venues for permissioned on-chain secondary trading
• Liquidity providers supplying tokenized NMS stocks to qualifying AMM pools
• Broker-dealers, custodians, advisers, and asset managers evaluating access to tokenized-stock markets
• Issuers whose NMS stocks may be tokenized for trading on a qualifying venue

What is still open

• Whether and how the SEC will modify the exemptions after reviewing public comments and operational experience
• Which proposed venues and liquidity providers will satisfy every condition and become operational
• How advisers, custodians, and broker-dealers will address custody, best execution, valuation, reconciliation, disclosures, and supervision when using qualifying venues
• What permanent market-structure rules will replace or follow the exemptions before they expire

What it means for an advisor

• Inventory any contemplated exposure to tokenized NMS stocks and determine whether the venue and liquidity providers satisfy the order's conditions
• Update due diligence for smart-contract auditability, participant permissioning, sanctions controls, issuer objections, trading limits, coordinated halts, and transaction reporting
• Assess custody, valuation, reconciliation, best-execution, liquidity, disclosure, and business-continuity procedures before permitting advisory accounts to use a qualifying venue
• Do not treat the order as blanket permission for tokenized securities, decentralized protocols, or activities outside the order's defined model

Previous interpretation

The ledger previously recorded Chairman Atkins's direction to staff to consider guidance, rulemaking, and a conditional innovation exemption for on-chain markets and self-custodial systems; the Commission has now issued operative, time-limited relief for a defined tokenized-NMS-stock venue model.