SEC exempts permissioned onchain venues for tokenised NMS stock from the exchange definition until 17 Sep 2031

What happened

On 17 Sep 2026 the U.S. Securities and Exchange Commission (SEC) issued Release No. 34-106402, an exemptive order it calls the "Innovation Exemption". It exempts Tokenized Securities Venues (TSVs) from the definition of "exchange" in the Securities Exchange Act of 1934, so they can trade tokenised National Market System (NMS) stock through permissioned automated market makers and liquidity pools. It also exempts certain liquidity providers from the definition of "dealer". Both exemptions are in effect from 17 Sep 2026 until 17 Sep 2031.

What changed

A qualifying TSV is not considered an exchange, need not register as one or operate as an alternative trading system, and is not subject to Regulation NMS. Conditions include:

• The TSV must be a U.S. person and comply with OFAC sanctions programs.
• Smart contracts must be auditable, public and deployed on a public, permissionless distributed ledger.
• Tokenised stock must carry the same rights and privileges as the traditional stock. Synthetic exposure products are excluded.
• Tokenised stock trades only against other tokenised NMS stock, a non-security crypto asset such as a payment stablecoin from a permitted issuer, or a tokenised money market fund.
• Tier 1 stock (S&P 500 and Russell 1000 stocks and some exchange-traded products) is capped at 75 symbols and 0.25 percent of the underlying stock's average daily share volume in the prior month. Tier 2, the rest, is capped at 250 symbols and 2.5 percent on the same base.
• No TSV credit to participants for buying tokenised stock, and no primary issuance.

Who is affected

• Firms planning onchain venues for tokenised NMS stock.
• Liquidity providers using proprietary capital. The dealer exemption requires them to trade only for their own account, hold no customer assets, keep records, notify the SEC and, on any public-facing website, disclose that they are not registered broker-dealers.
• Issuers of the underlying stock. For stock tokenised by an unaffiliated third party, the TSV must give the issuer written notice, trading waits at least 30 calendar days from receipt, and a written objection by day 30 blocks it.
• SEC-registered firms, which can be eligible to run a TSV if they keep registered activity separate.

The order grants no exemption under the Investment Company Act of 1940 and gives no view on whether TSVs are "digital asset service providers" under the GENIUS Act.

What happens next

A TSV must publish a public notice on its website at least 30 calendar days before operating, and notify the SEC within one business day of publishing it. The SEC is taking comments on all aspects of the exemptions under File No. 4-927; the order states no closing date. The Commission may modify the exemptions, including their length.