U.S. stocks now have a legal path to trade inside onchain liquidity pools. On September 17, the SEC approved an order that the agency calls the “Innovation Exemption.” The order lets a new category of platform, the Tokenized Securities Venue (TSV), operate without registering as a national securities exchange. In exchange, TSVs accept strict conditions on what they trade, how much they trade, and who trades. Additionally, the order shields certain liquidity providers from dealer registration. The relief runs until September 17, 2031, and the Commission opened a public comment file under File No. 4-927.
🚨 TODAY: The SEC issued an order granting temporary, conditional exemptive relief to Tokenized Securities Venues from the definition of “exchange” in the Exchange Act to trade tokenized NMS stock using innovative permissioned automated market makers and liquidity pools. pic.twitter.com/VDi7Oty2d9
— U.S. Securities and Exchange Commission (@SECGov) September 17, 2026
What a Tokenized Securities Venue Actually Is
The SEC built the TSV definition around automated market makers rather than order books. According to the order, a TSV brings together buyers and sellers through one or more AMM liquidity pools. It also sets the standards that decide who can trade in those pools. In practice, a TSV might deploy the pool contract, set its fees, or hold the power to pause it. Meanwhile, access stays permissioned. A TSV can enforce this with wallet allow-lists or with tokens coded to move only between credentialed addresses.
The pools themselves, however, must live on public, permissionless blockchains. The SEC requires every TSV smart contract to be auditable and public. Consequently, researchers and third parties can inspect the code and flag vulnerabilities. Each pool pairs a tokenized stock with another tokenized stock, a non-security crypto asset, or a money fund token. The order specifically names payment stablecoins issued under the GENIUS Act as eligible pair assets. Finally, every TSV must qualify as a U.S. person, which places it squarely under OFAC sanctions obligations.
Only Real Shares Qualify
The exemption draws a firm line between tokenized equity and synthetic exposure. A TSV must verify that each token carries the same rights as the traditional share. That means equal dividends, equal voting rights, and an equal claim on residual assets in a liquidation. Third-party tokenizers also must pass through proxy materials to token holders at no cost. By contrast, tokenized linked securities and tokenized security-based swaps receive no relief at all.
Issuers also gain a meaningful check on third-party tokenization. Before listing a stock tokenized by an unaffiliated firm, a TSV must send written notice to the issuer. The issuer then has 30 calendar days to object. If it objects, the TSV cannot list that token. Notably, this condition lands during a live public dispute. Unchained reported that AMC CEO Adam Aron recently clashed with Robinhood CEO Vlad Tenev over synthetic AMC tokens.
Hard Caps on Symbols and Volume
The SEC capped the experiment using tiers from the existing Limit Up-Limit Down (LULD) Plan. Tier 1 covers S&P 500 and Russell 1000 names plus eligible ETPs. A TSV can trade up to 75 Tier 1 symbols. However, its volume in each one cannot exceed 0.25% of that stock’s prior-month average daily share volume. Tier 2 covers everything else, with limits of 250 symbols and 2.5% of average daily volume.
The Commission explains its reasoning directly in the order. AMM pools price assets using the ratio of tokens in each pool, not the national best bid. As a result, onchain prices could drift away from prices on traditional exchanges. The volume caps aim to keep any such dislocation from spilling into broader equity markets. Enforcement follows a stepped model. A TSV gets a pass on its first volume breach in a stock. After that, each breach forces a three-month trading pause in that name.
Transparency, Halts, and No Leverage
The order replaces traditional exchange reporting with onchain-native disclosure. Specifically, TSVs must publish machine-readable transaction data within ten minutes of every trade. That feed must show symbols, dollar-denominated price, size, UTC timestamp, and trade direction. TSVs also must publish pool contract addresses, daily pair volume, and end-of-day pool sizes.
Market integrity rules carry over as well. When a primary listing exchange halts a stock, the TSV must stop trading the token at the same time. Similarly, TSVs must notify participants immediately about hacks, outages, or other significant operational events. Leverage stays off the table entirely. A TSV cannot borrow, hypothecate assets, or extend credit to participants. Moreover, no TSV may claim SEC registration or approval, and each must disclose that it operates unregistered.
Liquidity Providers Get Their Own Relief
The order’s second exemption targets the firms that fund the pools. A “Covered Firm” can supply tokenized stock to AMM pools using its own capital without registering as a dealer. That relief extends to classic dealer behavior, such as quoting prices to customers or committing capital by agreement. However, the firm’s securities business must stay limited to tokenized NMS stock trading on TSV pools. Covered Firms also must notify the Commission and disclose their role publicly. Without this carve-out, most professional market makers would face dealer registration before providing any meaningful depth.
Why the SEC Moved Now
The exemption arrives two days after a major setback in Congress. The Block reported that the Senate rejected the CLARITY Act in a 49-50 vote on September 15. In his statement, Chairman Paul Atkins framed the order as “a bridge toward durable rulemaking.” He also stressed that the Commission acted within its existing statutory authority. Meanwhile, demand for tokenized equities keeps climbing. According to Unchained, the tokenized stock market grew from $688 million in January to nearly $3 billion.
The other commissioners emphasized the measured design. Commissioner Hester Peirce described the order as an interim step toward permanent rules. She also noted plainly that “this order is not about decentralized finance.” Commissioner Mark Uyeda placed the relief alongside earlier exemptions that helped launch index funds and ETFs. Furthermore, he asked commenters to submit metrics, case studies, and incident analyses.
What Comes Next
No TSV can launch immediately. Each venue must post a public notice at least 30 calendar days before it begins operating. Issuers of third-party tokenized stocks also get their own 30-day objection window. Therefore, the earliest live pools likely arrive in mid to late October. Meanwhile, the SEC wants feedback on the tier caps, the five-year term, and possible Regulation NMS relief for broker-dealers. The answers will shape whether onchain equity trading graduates into permanent market structure.
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