The U.S. Securities and Exchange Commission has issued an “innovation exemption” that immediately permits qualifying venues to support onchain trading of certain tokenized stocks, opening a provisional route for blockchain-based securities markets while the agency develops permanent rules.
The order allows eligible “tokenized securities venues” to operate without being classified as securities exchanges under specified conditions. It also creates a limited exemption for some liquidity providers, allowing them to trade stocks or supply liquidity through automated market makers and smart contracts without being treated as securities dealers.
SEC Chair Paul Atkins said the agency acted under its existing statutory authority after the Senate failed to advance the Clarity Act, legislation that would have established a federal framework for digital-asset regulation. The bill fell in a 49-50 Senate vote on Sept. 15.
The SEC has opened a public-comment process alongside the exemption, signaling that the measure is intended as an interim framework rather than a completed rulebook for tokenized securities.
A conditional path for tokenized stock venues
The exemption focuses on venues that facilitate trading in securities represented on a blockchain. Under the framework described by the SEC, a tokenized stock must correspond to an underlying security rather than simply track its market price.
That distinction excludes synthetic tokens, which are instruments designed to mirror the performance of a stock without necessarily giving the holder a direct claim on the underlying share. The SEC’s approach places tokenized shares closer to conventional securities infrastructure, even when the trading and settlement process uses public blockchain networks.
Issuers will retain the ability to prevent their securities from trading on an exempt venue. That provision gives public companies and other issuers a measure of control over where tokenized versions of their shares circulate, potentially limiting the ability of platforms to list securities without issuer involvement.
Atkins said the exemption was developed over more than a year in response to market interest in bringing securities trading onchain. The structure attempts to accommodate automated trading systems without applying the full exchange and dealer framework designed for large national stock exchanges and traditional market-making firms.
Automated market makers use smart contracts to quote prices and manage pools of assets according to programmed rules. They have become common in decentralized finance, but their use with regulated securities has remained uncertain because securities laws can classify participants as dealers or exchanges depending on their activity.
By carving out certain liquidity providers, the SEC is offering a narrower compliance path for platforms that use those mechanisms. The exemption does not remove securities-law obligations generally; it changes the regulatory treatment only for firms and activities that meet its conditions.
Sanctions compliance remains a requirement
Participating venues must comply with U.S. sanctions rules, Atkins said. That requirement means firms seeking to use the exemption will need controls capable of screening users and restricting access where required by U.S. law.
The sanctions condition could prove particularly consequential for venues built around open blockchain infrastructure. Public chains allow assets to move between addresses without the same built-in account controls used by brokerages, so tokenized securities platforms may need to combine onchain settlement with identity, eligibility, and transfer restrictions.
The framework therefore gives platforms room to use blockchain-based trading tools while preserving compliance obligations that apply to securities activity. A venue that cannot meet those controls may find the exemption difficult to use in practice, even if its technology is capable of handling tokenized shares.
The SEC has not presented the order as a blanket approval for every blockchain-based stock product. Its exclusion of synthetics and its issuer opt-out both limit the scope of instruments that could qualify.
Rulemaking work continues across the SEC
The exemption arrives as the SEC prepares additional proposals related to digital assets before the end of the year. Agency priorities referenced in the material include potential changes to broker liquid-capital requirements, record-keeping rules, and exchange rules as they apply to digital assets.
Those issues extend beyond tokenized stocks. Broker capital rules affect how much readily available funding firms must maintain, while record-keeping requirements determine how transactions, customer information, and operational activity must be preserved. Applying those requirements to blockchain-based systems could shape whether tokenized securities develop through registered financial firms, new specialist venues, or hybrid models.
Atkins has also discussed creating a “token taxonomy” intended to clarify which cryptocurrencies the SEC considers securities. The agency and the Commodity Futures Trading Commission have separately described joint modernization efforts under the name Project Crypto.
CFTC Chair Michael Selig said this week that the agency was “locked in and ready to ship its rules for the new frontier of finance.” The CFTC’s involvement matters because the boundary between securities and commodities remains central to U.S. digital-asset policy, particularly for tokens and platforms that may fall under overlapping or disputed regulatory categories.
Market interest has expanded beyond stablecoins
Token Terminal data shared on Sept. 12 placed the value of tokenized assets at $346 billion. The same material said fully backed tokenized stocks reached a $3 billion market capitalization during the first week of September.
Tokenized Treasury products and stablecoins have accounted for much of the practical use of blockchain-based financial instruments so far. Extending tokenization to public equities introduces more complex questions around ownership records, shareholder rights, corporate actions, trading surveillance, and settlement.
The SEC’s exemption does not resolve each of those questions permanently. It gives firms a regulated opening to test structures for onchain stock trading while the agency gathers public feedback and prepares broader rules.
For companies building tokenized securities infrastructure, the immediate opportunity comes with a narrower mandate: create venues that can support genuine securities, honor issuer restrictions, manage sanctions compliance, and operate within the exemption’s terms.
Curious how onchain tokenized stocks work in practice? Explore their mechanics in this detailed guide today.
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