The U.S. Securities and Exchange Commission issued an order Thursday granting temporary, conditional exemptive relief to tokenized securities venues, letting them trade tokenized National Market System (NMS) stock without registering as an exchange, the agency announced in a press release. The so-called Innovation Exemption lets these venues, known as TSVs, use permissioned automated market makers and liquidity pools to match buyers and sellers of onchain stock tokens.
How the Innovation Exemption Works
Under the order, a tokenized securities venue brings together buyers and sellers of tokenized NMS stock by providing one or more automated-market-maker liquidity pools for permissioned participants and by setting standards for who can access trading on those pools. The relief carries conditions the SEC says are designed to keep it in the public interest and consistent with investor protection. The order also grants a conditional exemption from the dealer definition to liquidity providers that supply tokenized NMS stock using proprietary capital, such as quoting prices to customers or committing capital.
A Temporary Bridge to Durable Rules
The exemptions expire five years after publication, and the order solicits public comment on possible modifications and next steps before it is published in the Federal Register. “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,’” said SEC Chairman Paul S. Atkins. He added that the temporary relief lets firms operate in a permissioned environment while the Commission weighs further action. Jamie Selway, director of the SEC Division of Trading and Markets, said the approval “marks an important milestone for the Commission’s work to open our capital markets for tokenized securities.”
Tokenization’s Path Through Washington
The order lands days after the Digital Asset Market Clarity Act stalled in the Senate, leaving the SEC to act within its existing statutory authority. It also builds on institutional infrastructure for tokenized equities, including ICE and tZERO’s NYSE tokenized securities work. The agency said it will use the public comments to decide whether further rulemaking is needed to make onchain stock trading permanent.
