The U.S. Securities and Exchange Commission on September 17, 2026 issued Order 34-106402, a five-year conditional exemption permitting a new class of operator — Tokenized Securities Venues (TSVs) — to trade tokenized National Market System stocks through permissioned automated market maker liquid...
The U.S. Securities and Exchange Commission on September 17, 2026 issued Order 34-106402, a five-year conditional exemption permitting a new class of operator — Tokenized Securities Venues (TSVs) — to trade tokenized National Market System stocks through permissioned automated market maker liquidity pools on public blockchains. The order exempts qualifying venues from the Exchange Act's definition of "exchange" and grants conditional dealer-registration relief to liquidity providers supplying capital to AMM pools.
The action follows the Senate's failure on September 16 to advance the CLARITY Act, which died 49–50 on a cloture vote. Rather than wait for Congress, both the SEC and the Commodity Futures Trading Commission moved within 24 hours to assert regulatory authority through existing statutory tools. The CFTC issued a parallel no-action letter exempting passive software providers from introducing-broker registration, provided they meet ten conditions and do not take custody or route orders.
The Innovation Exemption is not a formal rulemaking. It is a time-limited, conditional order designed to generate live market data that the Commission will use to determine whether permanent rules are warranted. Venues may list up to 75 Tier 1 symbols (S&P 500 and Russell 1000 constituents) at 0.25% of average daily volume, and up to 250 Tier 2 symbols (remaining NMS stocks) at 2.5% of average daily volume. Breaching a volume cap triggers a three-month trading pause in that security.
Order 34-106402 grants temporary, conditional exemptive relief under Section 36 of the Securities Exchange Act of 1934. The relief covers two provisions:
Exchange Exemption. TSVs are exempted from the definition of "exchange" under Section 3(a)(1), allowing them to operate tokenized stock markets without registering as national securities exchanges. The exemption requires TSVs to operate permissioned trading environments on public, permissionless blockchains — a deliberate architectural choice that separates infrastructure-layer openness from participant-layer gatekeeping.
Dealer Exemption. Liquidity providers supplying proprietary capital to AMM pools receive conditional relief from the "dealer" definition under Section 3(a)(5), even when their activities — quoting prices, providing committed capital — would otherwise trigger registration.
The relief expires five years from publication of the order. The SEC simultaneously opened a public comment period, soliciting data, case studies, and operational feedback from live or test environments.
Commissioner Mark Uyeda stated: "The Innovation Exemption is designed to be controlled," noting that symbol and volume limits would give the Commission data to assess onchain securities trading and inform future rules.
The order imposes specific conditions on any venue seeking to rely on the exemption:
The order draws explicit boundaries around what is not covered:
The order uses the existing Limit Up-Limit Down (LULD) plan tier structure to calibrate its limits:
| Parameter | Tier 1 | Tier 2 | |-----------|--------|--------| | Eligible securities | S&P 500, Russell 1000, select ETPs | All other NMS stocks | | Maximum symbols per TSV | 75 | 250 | | Volume cap per symbol | 0.25% of prior month's ADV | 2.5% of prior month's ADV | | Breach consequence | 3-month trading pause | 3-month trading pause |
These caps are designed to prevent tokenized venues from absorbing meaningful liquidity from primary exchanges during the trial period. For context, 0.25% of ADV for a liquid S&P 500 stock such as Apple (average daily volume ~60 million shares) would translate to approximately 150,000 shares per day — a narrow window meant to test infrastructure without creating market-structure risk.
The dealer exemption addresses a structural problem: market makers providing liquidity to AMM pools perform activities — quoting prices, committing capital — that traditionally require SEC dealer registration. The order exempts these participants conditionally, provided they:
This relief is significant because it removes a registration barrier that had previously made institutional participation in onchain liquidity provision legally uncertain.
The Innovation Exemption arrives as the broader tokenized real-world asset market has reached $31.76 billion in total value as of June 2026, according to industry trackers — a 300% year-over-year increase. Within that figure, tokenized equities specifically have been the fastest-growing sub-category, climbing 39.37% month-over-month to $1.68 billion in distributed value as of June 1, 2026. Spot trading of tokenized stocks totaled $15.1 billion in Q1 2026, overtaking the $14.8 billion traded in all of H2 2025.
Several major crypto firms — Coinbase, Robinhood, Gemini, and Kraken — have launched tokenized equity offerings offshore but have not offered them to U.S. customers due to regulatory uncertainty. The Innovation Exemption creates, for the first time, a defined legal pathway for onshore tokenized stock trading.
Boston Consulting Group projects tokenized RWAs reaching $16 trillion in assets under management by 2030, a scenario implying roughly 50% compound annual growth from current levels. The SEC's exemption could accelerate the U.S. share of that trajectory.
tZERO. CEO Alan Konevsky described the exemption as "a significant step by the SEC in recognizing the role of tokenized assets and DeFi," adding that the order validates tZERO's approach of pursuing real — not wrapped — tokenized securities.
Coinbase. Vice Chairman Ryan VanGrack posted on X: "As anticipated, clear rules are coming. Today's clarity comes courtesy of @SECPaulSAtkins, not Congress." Coinbase shares rose approximately 5% on September 18.
Galaxy Digital. Head of Research Alex Thorn highlighted the safeguards built into the order, noting the volume caps and issuer-veto provisions as deliberate guardrails that protect market structure while permitting experimentation.
The broader crypto market showed restrained reaction. Bitcoin traded at $76,621 on September 17, up 0.88% over 24 hours, with the modest move attributable primarily to the prior day's Fed rate hike (25 bps to 3.75%–4.00%) rather than the SEC order.
Hours after the SEC's announcement, the CFTC's Market Participants Division issued a no-action letter declaring it would not recommend enforcement against passive software providers — including crypto wallets and trading applications — for failing to register as introducing brokers, provided they meet ten conditions. Key conditions include: no custody of customer funds, no order routing, and no issuance of buy or sell signals.
The coordinated timing was notable. Both agencies have publicly stated they will exercise existing statutory authority rather than wait for comprehensive legislation after the CLARITY Act's Senate failure. The SEC's Innovation Exemption and the CFTC's no-action letter represent the clearest signal yet that U.S. digital asset regulation will proceed agency-by-agency rather than through a single legislative framework.
The Innovation Exemption is a regulatory sandbox, not a permanent framework. Its five-year duration, narrow volume caps, and issuer-veto provisions reflect a Commission that is testing infrastructure, not endorsing a market structure. The question the order poses is whether tokenized venues can demonstrate sufficient liquidity, transparency, and investor protection to justify permanent rulemaking — and whether the data generated in the trial period will produce answers before the exemption expires. For now, the economic significance is contained: 0.25% of ADV in 75 blue-chip names is a controlled experiment, not a market transformation. What matters is whether the experiment produces results that justify scaling.