The U.S. Securities and Exchange Commission on September 17 issued a temporary, conditional “Innovation Exemption” permitting certain Tokenized Securities Venues to trade tokenized National Market System stocks through permissioned automated market makers and liquidity pools. The move opens a defined regulatory route for eligible blockchain-based trading systems rather than granting a blanket authorization for tokenized equities.
Five-year exemption for tokenized stock venues
The exemption provides a five-year pathway for qualifying blockchain venues and automated liquidity providers to operate without immediate treatment as conventional exchanges or dealers under specified securities laws, according to Axios.
That distinction is central to the SEC’s approach. The relief is directed at a defined group of qualifying venues and liquidity providers, not every platform that may seek to offer blockchain-based representations of U.S. stocks.
Permissioned AMMs and liquidity pools
The SEC’s framework specifically addresses tokenized National Market System stocks traded through permissioned automated market makers and liquidity pools. In its September 17 announcement, the agency described the covered platforms as Tokenized Securities Venues, or TSVs.
The stated trading model covered by the exemption includes permissioned systems, but the announcement does not present the relief as unrestricted approval for onchain equity trading or for conventional exchange operations conducted on a blockchain.
Temporary conditions and public comment
The SEC said the relief is both temporary and conditional and is seeking public comment on potential modifications as well as longer-term regulatory action for onchain trading, according to the agency’s September 17 statement.
For now, the five-year route described in reporting remains part of the SEC’s conditional, time-limited relief, while the request for comment leaves the framework open to revision as participants and the public weigh in on a more durable approach.
SEC’s case for tokenization in market infrastructure
The SEC characterized tokenization as potentially capable of modernizing securities issuance, trading, settlement and ownership records, while reducing costs and improving transparency and liquidity, according to a September 17 communication. Those were stated potential benefits, not assurances of outcomes.
Separately, the SEC requested comment on possible modifications and longer-term rules for onchain trading alongside the temporary relief, leaving the framework open to further development.
