The SEC has granted temporary and conditional relief allowing qualifying Tokenized Securities Venues to facilitate limited trading of tokenized National Market System stocks through permissioned automated market makers and liquidity pools. The exemption creates a controlled path for onchain stock trading while preserving ownership rights, trading-halt coordination, public disclosures and limits on trading volume and eligible symbols.
U.S. Securities and Exchange Commission (SEC)
Official Release:
https://www.sec.gov/newsroom/press-releases/2026-90-sec-issues-innovation-exemption-facilitate-trading-tokenized-nms-stock-request-comment
NEWS:
The U.S. Securities and Exchange Commission issued an "Innovation Exemption" that temporarily removes qualifying Tokenized Securities Venues, or TSVs, from the Exchange Act definition of an exchange when they meet the conditions established by the SEC. A TSV may bring together permissioned buyers and sellers of tokenized NMS stocks through automated market maker liquidity pools deployed on distributed-ledger infrastructure. The relief also applies narrowly to certain liquidity providers that contribute tokenized stocks from their own capital and could otherwise raise questions under the Exchange Act definition of a dealer. The exemption does not broadly deregulate tokenized securities, authorize unregistered public offerings or convert ordinary crypto tokens into stocks. Eligible assets must represent actual NMS stocks, and the order expressly excludes third-party crypto assets that merely provide synthetic exposure through linked securities or security-based swaps. Primary issuances and initial securities offerings are not permitted on a TSV under this exemption.
Investor-protection conditions are central to the framework. A TSV must verify that a tokenized stock provides the same rights and privileges as the equivalent traditional share, including the same economic interest and applicable dividend rights. When an unaffiliated third party tokenizes a company's stock, the venue must give the underlying issuer written notice and an opportunity to object before trading begins. Smart contracts must be auditable and publicly available and must operate on a public, permissionless distributed ledger, even though access to the trading venue is limited to verified or credentialed participants. A TSV must coordinate its trading halts with the primary listing exchange, publish information about its operations and affiliate activity, maintain required books and records and provide transaction transparency. The SEC also imposed tier-based limits on the number of available stock symbols and the percentage of average daily share volume that may be traded. These restrictions are intended to reduce the risk that prices created inside relatively small AMM liquidity pools become disconnected from prices in the conventional market or disrupt trading in the underlying listed shares.
The exemptions remain temporary and are scheduled to expire after five years unless the SEC modifies or replaces them. This limited duration allows regulators to observe how tokenized stock venues, smart contracts and onchain liquidity providers perform before deciding whether a permanent regulatory structure is appropriate. For investors, tokenized NMS stock should not be evaluated in the same way as an ordinary crypto asset: the critical questions are whether the token conveys enforceable ownership rights, how dividends and voting materials are delivered, who maintains the shareholder record, how assets are transferred or custodied and whether prices can diverge from the underlying exchange-listed security. Automated market makers also introduce risks involving liquidity depth, smart-contract vulnerabilities, pricing formulas and transaction execution. The exemption may support faster settlement and more transparent onchain records, but it does not eliminate federal antifraud and anti-manipulation requirements or guarantee that every tokenized stock venue, liquidity provider or smart contract is safe. Investors should verify that a venue is actually operating within the SEC exemption and satisfying all stated conditions before relying on references to "SEC-compliant" tokenized stock trading.
KEY POINTS:
- Qualifying TSVs may facilitate limited onchain trading of tokenized NMS stocks through permissioned AMM liquidity pools.
- The exemption does not permit primary offerings or synthetic crypto assets that merely track stock prices.
- Tokenized shares must provide holders with the same rights and privileges as equivalent traditional shares.
- Trading venues must follow symbol limits, volume caps, disclosure requirements and primary-exchange trading halts.
- The temporary exemption lasts five years and does not remove federal antifraud or anti-manipulation protections.