SEC opens a five-year lane for tokenized stock trading

On September 17, 2026, the SEC granted a five-year exemption that lets qualifying venues trade tokenized US-listed stocks through automated market makers without registering as exchanges.

The agency calls it the Innovation Exemption. It is an exemptive order, Release No. 34-106402, not a new rule. It follows two proposals: Regulation Crypto Assets on August 18, 2026, and a transfer agent rewrite allowing blockchain recordkeeping on September 1, 2026.

What the Innovation Exemption does

The order contains two exemptions. The first covers a new category the SEC calls a Tokenized Securities Venue, or TSV. A TSV brings buyers and sellers of tokenized stock together through one or more automated market makers and liquidity pools on a public, permissionless blockchain, and it sets the standards for who may trade there. A qualifying TSV is exempt from the definition of "exchange" in the Securities Exchange Act of 1934.

The second exemption covers liquidity providers. A firm that supplies tokenized stock to a TSV pool using its own capital would normally risk being treated as a dealer. The order exempts it from the definition of "dealer," provided its securities activities are limited to trading tokenized stock in pools operating under the TSV exemption.

Both exemptions run through September 17, 2031. Chairman Paul Atkins called the order an interim measure that "must be followed by durable rulemaking." Anti-fraud and anti-manipulation provisions still apply in full.

Which tokens qualify

The order covers tokenized NMS stock, meaning shares of US exchange-listed companies in token form. A token qualifies whether it is issued by or on behalf of the company itself, or by an unaffiliated third party.

The venue must verify that the token gives holders the same rights and privileges as the traditional share of the same class. According to Mayer Brown's summary of the order, that includes the same interest in the company, dividends, voting rights and liquidation rights. Products that only track a stock's price are excluded. The fact sheet names two: a tokenized linked security and a tokenized security-based swap.

Before a TSV lists a third-party token, it must give the underlying company written notice and an opportunity to object.

The conditions and caps

Sullivan & Cromwell's memo adds that a TSV may not offer financing or margin, handles secondary trading only, and must disclose that it is not registered with the SEC.

The order asks the public 10 numbered questions about possible changes and next steps. Sidley Austin notes that no comment deadline was set.

Regulation Crypto Assets, proposed August 18

Regulation Crypto Assets is a proposed rule, not a final one. It would create an offering regime for what the SEC calls covered investment contracts involving crypto assets, building on an interpretive release the Commission issued in March 2026.

A startup exemption would let an issuer raise up to $5 million over a period of up to four years without registering, subject to public filings at the start and end of that period and narrative disclosures to investors. A fundraising exemption, modeled in part on Regulation A, would allow up to $20 million per 12 months under Tier 1 and up to $75 million per 12 months under Tier 2, with financial statements (audited for Tier 2) and ongoing reporting.

The proposal also includes an investment contract safe harbor. An issuer that has completed or permanently stopped the essential managerial efforts it promised, and files a public certification with a supporting analysis, would have the investment contract deemed to have ceased to exist. The token itself would then no longer be treated as subject to that contract under the investment contract definitions.

The proposal was published in the Federal Register on August 21, 2026. Comments are due by October 20, 2026.

Transfer agent rules, proposed September 1

A transfer agent keeps the official record of who owns a company's shares. The September 1, 2026 proposal, Release No. 34-106246, would, among other changes, let a registered transfer agent use a blockchain as its master securityholder file, or as one part of it, provided the agent keeps exclusive control of the file and meets every recordkeeping and safeguarding requirement.

According to Jones Day's summary, records for tokenized securities would capture digital wallet addresses as securityholder identification. The proposal was published in the Federal Register on September 4, 2026, and comments are due by November 3, 2026.

What this means for a retail buyer

For buying crypto, little changes today. Bitcoin, ether, and stablecoins are not NMS stocks, so buying them on an exchange works as it did before September 17, 2026. If you are weighing a spot purchase against a fund, our comparison of spot bitcoin ETFs and buying bitcoin directly still applies.

For tokenized stocks, the order does not approve any particular venue. Mayer Brown reads the order as allowing retail investors, institutional investors, or registered broker-dealers to be admitted, but each venue sets its own access standards. Trading would happen in self custody, through a wallet the venue has permissioned, with volume caps that keep these pools small relative to the underlying stock.

The same-rights test is the practical filter. A token sold as "stock exposure" that does not carry dividends, voting, and liquidation rights is not tokenized NMS stock under this order.

Neither proposal is in force, and either could change before adoption. For the current legal picture, see our guide to crypto legality in the United States.

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