SEC opens a five-year window for on-chain trading of listed stocks

The Securities and Exchange Commission on 17 September issued an order that lets new venues trade tokenized versions of National Market System stocks for five years without being treated as exchanges. The same order exempts certain liquidity providers from dealer registration. Chairman Paul Atkins called the package the Innovation Exemption. It is release 2026-90. It expires five years after publication in the Federal Register.

The venues are labelled Tokenized Securities Venues, or TSVs. They would run permissioned automated market makers and liquidity pools. A TSV must be a US person and must follow Treasury's Office of Foreign Assets Control sanctions rules. It must set access standards so that only approved participants can trade. Tokenized NMS stocks on a TSV face limits on the number of symbols and on volume, with caps tied to the limit-up, limit-down tiers already used in the cash market. Issuers who do not want their shares tokenized can object after written notice. Trading in a token must stop when trading stops on the traditional venue. The tokens are supposed to carry the same rights as the cash shares, including voting. Dollar-denominated data on price, size, time, pool address, end-of-day pool size and daily volume must be published at regular intervals.

Commissioner Hester Peirce said the order creates the TSV category and takes those venues out of the Exchange Act definition of "exchange," while taking some pool liquidity providers out of the definition of "dealer." Commissioner Mark Uyeda said the point is to watch how on-chain and traditional markets interact before the Commission writes lasting rules. Atkins placed the order against a political failure. "Earlier this week, Congress was unsuccessful in advancing the CLARITY Act," he said. The Senate did not move the Trump-backed crypto bill after Democrats demanded tighter limits on the president's own digital-asset interests. Atkins presented the exemption as what the Commission can do under Section 36(a)(1) of the Exchange Act without that statute.

Tokenized stocks already exist in a grey zone. Some platforms have offered blockchain tokens that track listed companies without the company's consent and, in some cases, without passing through voting rights. The new order tries to pull that activity into a supervised box: notice to the issuer, an opt-out, matching halt rules, and a data feed the Commission can study. Robinhood and other firms that have tested stock tokens in the United States would have to send that notice and accept an issuer veto. Companies that have objected to unauthorized tokens now have a formal letter to send.

The exemption is temporary and conditional on purpose. Five years is long enough for pools to form and short enough for the Commission to shut them if the data look bad. Symbol and volume caps are how the agency keeps a TSV from becoming a second NYSE on day two. Public pool data are how it hopes to see whether on-chain prices track the tape or drift. None of that answers the older question of whether a token in an AMM pool is the same economic object as a share at a clearinghouse. Atkins says the tokens must carry the same rights. The first dispute will come when a token holder tries to vote or when a halt on Nasdaq is not mirrored in a pool.

Crypto legislation failed in the Senate this week. The Commission filled the gap with an order. That is the sequence. Market participants who wanted a statute got an experiment instead. Issuers who wanted a ban got an opt-out. The experiment's first measurable outputs will be the list of symbols that TSVs notify, the list of issuers that object, and the first day's public volume file.