The US Securities and Exchange Commission has opened a five year window for share trading to move onto public blockchains. In an order issued on 17 September 2026, the Commission granted temporary, conditional relief from the definition of an “exchange” under the Securities Exchange Act of 1934 to a new category of trading platform it calls a Tokenised Securities Venue, or TSV.
The relief, which the SEC has branded the Innovation Exemption, allows a TSV to bring buyers and sellers of tokenised National Market System stock together through permissioned automated market makers and liquidity pools, rather than through a registered exchange. A second exemption covers firms supplying liquidity to those pools, carving them out of the Exchange Act definition of a “dealer” when their activity is confined to the venue.
What the exemption actually permits
A TSV, in the Commission’s formulation, does two things: it qualifies a venue by hosting the pools where approved participants meet and strike their trades, and by deciding who gets through the door in the first place. The tokenised stock itself must be a tokenised version of a real NMS stock, whether tokenised by the issuer or by an unaffiliated third party. The Commission has been edging toward onchain market plumbing for some time, having already cleared Franklin Templeton's onchain BENJI money fund for cash management. Synthetic constructions sit outside the perimeter: the order shuts out wrappers built by outsiders that merely track a share’s price without representing the share itself, naming tokenised linked securities and tokenised security based swaps as examples.
The liquidity provider relief is drawn just as tightly. It is aimed at firms putting their own money to work as liquidity in a pool, and it applies even when they engage in activities that would normally be considered dealing, whether that means showing prices to customers or signing up to provide capital on demand. Their securities activity must remain within the pool of a venue operating under the exemption.
The conditions attached
Six conditions sit on the face of the press release, and they are where the compliance work lives. Trading on a TSV is capped by both symbol count and volume. The venue must verify that a tokenised stock carries the same rights and privileges as traditional stock of an equivalent class. Where a stock has been tokenised by an unaffiliated third party, the venue must give the issuer of the underlying stock written notice and an opportunity to object before listing it.
The technical conditions are equally pointed. Smart contracts used by a venue must be auditable, public, and deployed on a public, permissionless distributed ledger. If the underlying stock stops trading on its primary listing exchange, the tokenised version must go dark at the same moment. Finally, a venue has to put its own business in public view: how it runs, what trades through it, and what its affiliates are doing on the same pools.
The order fills in the numbers the press release leaves out. The caps are tiered by stock rather than by venue, borrowing the tiering used in the limit up/limit down plan, where the top tier holds the largest capitalisation names. A venue may carry no more than 75 first-tier symbols, and its turnover in any one of them is limited to 0.25 per cent of that stock’s average daily share volume over the previous month. For second-tier stock, the allowance widens to 250 symbols and 2.5 per cent. Transaction data must be freely and publicly available in a machine-readable format for the previous 30 days, refreshed within 10 minutes of any trade. A venue must be a US person, cannot offer financing, and is barred from describing itself as registered with, approved by or endorsed by the Commission.
Temporary by design
The Commission was explicit that this is a holding position rather than a settlement. The press release puts the lifespan at five years from publication; the order itself is more precise, running the relief from 17 September 2026 until 17 September 2031, and the SEC reserved the right to modify their length or any other aspect where it judges that necessary or appropriate in the public interest and consistent with investor protection.
SEC Chairman Paul S. Atkins said in a statement:
"Today, the Securities and Exchange Commission is taking a significant step forward, within its statutory authority, to bring America's capital markets into the digital age by facilitating onchain trading of certain tokenized stocks through the 'Innovation Exemption.' The Innovation Exemption, while temporary, would allow TSVs to trade tokenized NMS stock in a permissioned environment today while the Commission considers the need for additional action to facilitate onchain trading. As we take this important first step, we invite public comment on all aspects of the Innovation Exemption to help inform the Commission as it considers further changes."
Paul S. Atkins, Chairman, US Securities and Exchange Commission
The Division of Trading and Markets framed the order as the beginning of an operational conversation rather than the end of a policy one.
Jamie Selway, Director of the SEC Division of Trading and Markets, said:
"Today's approval of exemptive relief for on-chain secondary trading on a TSV – known as the 'Innovation Exemption' – marks an important milestone for the Commission's work to open our capital markets for tokenized securities. The division stands ready to work with interested parties seeking to operate a TSV and field questions from investors and market participants."
Jamie Selway, Director, Division of Trading and Markets, US Securities and Exchange Commission
What compliance teams should be reading for
No venue is named in the order. The relief is generally available rather than granted to a particular applicant, which means the first movers will be self-selecting. A firm intending to rely on it must publish a prominent notice on its website at least 30 calendar days before it begins operating, and tell the Commission in writing within one business day of that publication. Liquidity providers relying on the second exemption have their own notice obligation.
For market infrastructure and surveillance teams, the halt condition is the one that bites soonest. Matching a venue’s trading state to the primary listing exchange in real time is an engineering problem before it is a policy one, and the same is true of publishing trade data on a ten minute cycle. The auditable, public, permissionless smart contract requirement rules out a private chain, and with it a good deal of the architecture that banks have favoured in tokenisation pilots to date. Tokenisation infrastructure is being built under quite different permissions elsewhere, including Coinbase's Abu Dhabi hub established with FSRA permission.
The Commission has invited comment on every aspect of the exemption and posed ten questions in the order, filed under number 4-927. It has not set a closing date for that comment process. For firms weighing whether to build toward the exemption or wait for something permanent, the five year clock and the open questions are the two facts worth holding together.
