Two days after the CLARITY Act died 49-50 in the U.S. Senate, the SEC and CFTC issued coordinated regulatory relief on September 17, 2026 that bypassed Congressional gridlock entirely. The SEC granted a five-year "Innovation Exemption" permitting tokenized National Market System (NMS) stocks to t...
"I want to extend my highest praise to Paul Atkins, Chairman of the U.S. Securities and Exchange Commission, for the wise decision he announced today on behalf of the SEC about Stock Tokens." — Adam Aron, CEO, AMC Entertainment
Two days after the CLARITY Act died 49-50 in the U.S. Senate, the SEC and CFTC issued coordinated regulatory relief on September 17, 2026 that bypassed Congressional gridlock entirely. The SEC granted a five-year "Innovation Exemption" permitting tokenized National Market System (NMS) stocks to trade on permissioned automated market makers (AMMs). The CFTC simultaneously expanded a no-action position freeing non-custodial software developers from introducing-broker registration requirements.
The twin actions represent the most significant U.S. regulatory opening for on-chain securities trading since the DTCC received its no-action letter in December 2025. Securitize (NYSE: SECZ) shares rose 18% on the announcement. The SEC order runs 60 pages, imposes tiered symbol and volume caps, and requires public smart-contract audits — a framework that structurally disadvantages offshore synthetic stock-token products from Robinhood, Kraken and Ondo Finance that do not confer full shareholder rights.
The CLARITY Act (H.R.3633) failed its Senate cloture vote 49-50 on September 15, 2026. The bill needed 60 votes. Four Republican senators — Jerry Moran, Rand Paul, Josh Hawley and Thom Tillis — joined all Democrats in voting against it. The dispute centered on ethics language governing officials' crypto holdings, not the market-structure framework itself. The bill would have established federal jurisdiction boundaries between the SEC and CFTC for digital assets.
Within 48 hours, both agencies acted unilaterally under existing authority. The SEC invoked Exchange Act Section 36(a)(1), which permits conditional exemptions deemed "necessary or appropriate in the public interest." The CFTC's Market Participants Division issued a staff letter broadening earlier relief. SEC Chair Paul Atkins had previewed the coordinated approach at ETHDenver in February 2026 under the agencies' joint "Project Crypto" initiative, which Atkins described as "unlike anything seen before at these two, often sparring agencies."
The SEC issued two linked five-year exemptions, effective September 17, 2026 through September 17, 2031:
Exemption 1 — Tokenized Securities Venues (TSVs): Qualifying venues are exempt from the "exchange" definition under the Securities Exchange Act. TSVs may facilitate secondary trading of tokenized NMS stocks through permissioned AMMs and liquidity pools. No central limit order books are permitted. Trading pairs are restricted to tokenized stocks paired with other tokenized stocks, stablecoins, or tokenized money market funds. No primary issuances are allowed.
Exemption 2 — Covered Firms: Liquidity providers deploying proprietary capital into TSV-affiliated AMM pools are exempt from the "dealer" definition under Exchange Act Section 3(a)(5). Covered Firms may not custody customer assets and must maintain website disclosures on non-registration status, compensation arrangements and risk controls.
Commissioner Mark Uyeda stated that tokenization could "modernize core market infrastructure functions, such as issuance, trading, transfer, settlement" and noted the Commission has historically used exemptive authority to introduce financial products, citing money market funds, index funds and exchange-traded funds as precedents.
The SEC is soliciting public comments on all aspects of the exemption and has requested "detailed, data-supported comments, ideally including metrics, case studies, incident analyses, and operational narratives from live or test environments."
The CFTC's Market Participants Division broadened a no-action position originally issued to Phantom Technologies on March 17, 2026. The September 17 expansion applies to any provider of "passive software" enabling users to trade Commission-regulated derivatives products. Software must connect users with registered futures commission merchants, introducing brokers and designated contract markets.
Ten conditions apply. The software must be non-custodial — providers never hold user funds or execute trading decisions. Phantom CEO Brandon Millman stated the decision opens "a path for non-custodial software providers" to "connect people with regulated markets."
The practical effect: DeFi front-ends, self-custodial wallet interfaces and trading aggregators that route to regulated venues no longer risk enforcement action for operating without introducing-broker registration, provided they meet the stated conditions.
Coinbase's Ryan VanGrack commented: "After years of regulatory standstill, we just saw meaningful relief in a matter of hours."
The SEC order imposes graduated restrictions:
| Tier | Eligible Securities | Max Symbols | Max Volume (of primary market) | |------|-------------------|-------------|-------------------------------| | Tier 1 | S&P 500 / Russell 1000 constituents | 75 | 0.25% | | Tier 2 | All other NMS stocks | 250 | 2.5% |
Exceeding volume thresholds triggers a three-month trading pause per violation. The caps reflect the SEC's caution: Tier 1 large-cap stocks face tighter limits, presumably to avoid market-structure fragmentation in the most liquid names.
Additional operational requirements include:
Rights and warrants, synthetic securities, derivatives and equity-linked debt are excluded.
Securitize (NYSE: SECZ) shares surged 18% to $9.14 on September 17, peaking at 24% intraday. The company, which became the first tokenization firm to list on the NYSE on July 2, 2026, is positioned as a direct beneficiary. CEO Carlos Domingo called the exemption "extremely positive because it gives a way to trade real tokenized stocks," according to CoinDesk.
Other potential beneficiaries include Bullish, Superstate and qualifying custodial models like Dinari — firms that can wrap NMS stocks with full shareholder rights into compliant on-chain instruments.
The exemption does not address fully decentralized, uncontrolled protocols. It does not modify Investment Company Act requirements. Registered entities remain subject to best-execution and reporting obligations. Liquidity-provider tokens issued by AMM pools receive no relief.
The SEC exemption arrives alongside the DTCC's own tokenization program. The Depository Trust and Clearing Corporation began limited production trades of tokenized securities in July 2026 under a three-year pilot backed by more than 50 firms, including BlackRock, Goldman Sachs and JPMorgan. The pilot covers Russell 1000 equities, major-index ETFs and U.S. Treasuries through DTCC's ComposerX platform. Full service launch is scheduled for October 2026.
DTCC received its SEC No-Action Letter on December 11, 2025. Its infrastructure tokenizes representations of securities held at the Depository Trust Company (DTC) — a centralized model. The Innovation Exemption, by contrast, permits permissioned but blockchain-native AMM trading. The two tracks run in parallel: centralized settlement infrastructure through DTCC, and decentralized-but-permissioned price discovery through TSVs.
Crypto-native firms including Circle, Ondo Finance and Ripple Prime are participants in the DTCC pilot, suggesting convergence between traditional and blockchain-native market infrastructure.
The exemption creates a structural challenge for existing offshore stock-token products. Robinhood's Stock Tokens, Kraken's xStocks and Ondo Finance's offshore equity products give non-U.S. investors price exposure to American equities without conferring actual shareholder rights — no voting, no dividends, no liquidation claims.
The SEC's framework requires full shareholder-right equivalence. Offshore synthetic products, in their current form, do not qualify. AMC CEO Adam Aron had criticized Robinhood on September 3, 2026 for issuing tokens referencing AMC shares without consent, calling it a "fictitious synthetic equity market" that "decouples stock token ownership from a company's ability to control its own capital raising efforts."
Robinhood's crypto head nevertheless welcomed the exemption, stating: "The SEC innovation exemption is a signal that tokenization is ready to come to the United States" and that it "will allow liquid tokenized securities markets to develop onshore."
The exemption effectively draws a line: compliant on-chain equity trading requires real shares with real rights. Synthetic exposure products may continue to serve non-U.S. markets but cannot access the new domestic framework.
The September 17 actions demonstrate that U.S. financial regulators can move without Congress when sufficient political will exists. The Innovation Exemption is cautious — volume caps, symbol limits, permissioned access and mandatory shareholder-right equivalence constrain it. Commissioner Uyeda's request for "metrics, case studies, incident analyses" signals the SEC intends this as a data-collection exercise, not a permanent framework.
The economic value question is whether permissioned AMMs on public blockchains can generate meaningful price discovery and liquidity alongside the DTCC's centralized model. The 0.25% volume cap on S&P 500 names limits short-term impact. The five-year clock started September 17, 2026. Whether it leads to permanent rulemaking depends on the data these venues produce and the political environment surrounding the next attempt at comprehensive legislation.