SEC Grants Five-Year ‘Innovation Exemption’ for On-Chain Secondary Trading of Tokenized NMS Stocks

# What the order does On Sept. 17, 2026, the Securities and Exchange Commission issued a temporary, conditional "Innovation Exemption" that permits specific on-chain secondary trading of tokenized National Market System (NMS) stocks. The exemption runs for five years, expiring Sept. 17, 2031.

A qualifying Tokenized Securities Venue (TSV) may facilitate trading through permissioned automated market makers and liquidity pools implemented by auditable smart contracts on a public, permissionless blockchain without being treated as an "exchange" under the Exchange Act for that covered activity.

# What counts as a TSV and Tokenized NMS Stock A TSV is an organization that brings together buyers and sellers of tokenized NMS stock by providing one or more permissioned AMM liquidity pools and setting access standards. The TSV must be a U.S. person.

"Tokenized NMS Stock" includes stock tokenized by or on behalf of the issuer and stock tokenized by an unaffiliated third party, but it excludes tokens that merely create synthetic exposure (for example, tokenized linked securities or tokenized security-based swaps).

# Conditions and guardrails The exemption is tightly conditioned. Key requirements include:

• Participant access standards and limits on who may interact in the permissioned pools.
• Issuer notice and objection rights: a TSV must send written notice to the issuer at the address listed on its Exchange Act filings before listing third-party-tokenized stock, and it must wait at least 30 calendar days after the issuer receives notice. If the issuer objects in writing during that period, trading cannot begin.
• Verification that token-holder rights mirror conventional shareholder rights.
• Trading limits and transaction transparency provisions for on-chain trades.
• Operational-event rules, public disclosures, and ongoing books-and-records obligations.
• SEC oversight provisions tied to the exemption.

# What the exemption does not do The relief is meaningful for a specific secondary-trading design, but it does not:

• Create a general exemption for tokenized securities.
• Permit primary issuances or initial offerings through a TSV.
• Replace Securities Act registration requirements for offers and sales.
• Remove obligations that apply to broker-dealers and other regulated parties outside the narrow exemption.

# Process and next steps

# Practical takeaway for market participants