The SEC issued a five-year exemptive order on Sept. 17, 2026, allowing on-chain trading of tokenized National Market System stocks through automated market makers and liquidity pools.
The order, which the agency calls the Innovation Exemption, runs through Sept. 17, 2031 unless the Commission changes it earlier.
It delivers two forms of relief. Qualifying tokenized securities venues escape the Exchange Act definition of exchange, and certain liquidity providers escape the definition of dealer.
A TSV brings together buyers and sellers by providing AMM liquidity pools for permissioned participants and setting the standards for who can access them.
Traders swap against pooled assets rather than an order book. Access is permissioned, but the smart contracts must be public and auditable on a permissionless blockchain.
Tokens must be real shares, not synthetic exposure
The tokens carry the same economic and governance rights as the listed stock, including dividends, voting and a share of residual assets. Synthetic products, tokenized security-based swaps, rights and warrants are all barred from a TSV.
The order permits no primary issuance or initial offerings, so companies can't treat tokenization as a capital raising opportunity at this stage.
Issuers get a veto. A venue must give written notice at least 30 calendar days before trading begins when a third party did the tokenizing, and an objection blocks the token. Other conditions include volume caps, symbol limits, disclosure and recordkeeping obligations.
The order followed a failed crypto bill
The Senate voted 49-50 on Sept. 15 against advancing the Digital Asset Market Clarity Act, pushing passage before the midterms further out of reach.
Chairman Paul S. Atkins referenced Congress's inability to advance the legislation when announcing the order two days later, describing it as action within the SEC's existing statutory authority.
Crypto markets rallied anyway. Bitcoin is up nearly 11% and ether has added roughly 12% since the vote, with smaller tokens gaining more.
Bitwise Chief Investment Officer Matt Hougan argued in a memo that the industry dodged compromises the bill would have forced, and regulators moved faster instead.
"Crypto sacrificed long-term certainty and got better rules, faster."
Matt Hougan, Bitwise
Hougan acknowledged the tradeoff is durability, since a future administration can rewrite an exemption but not a statute.
The SEC frames the exemption as an interim step designed to generate observable data for permanent rulemaking.
For investors, the practical test over the next five years is whether public companies agree to let their shares trade this way at all.
