Securities Regulation Daily Wrap Up, SEC NEWS AND SPEECHES—SEC Chair enters order providing temporary exemption relief for defined Tokenized Securities Venues, (Sep 17, 2026)

By Jay Fishman, J.D.

This “innovation exemption” for tokenized NMS stock is a small but significant experimental step toward permanent rulemaking.

SEC Chair Paul Atkins signed an order, effective September 17, 2026, granting a temporary exemption for defined Tokenized Securities Venues (TSVs) that buy and sell tokenized National Securities Market (NMS) stock. The exemption, effective for five years and subject to six conditions, specifically grants the following two exemptions:

1. An exemption from Exchange Act Section 3(a)(1) for TSVs; and

2. An exemption from Exchange Act Section 3(a)(5)—the “dealer” definition—for certain liquidity providers called “covered firms.”

And here are the six conditions:

1. Tokenized NMS stocks traded on a TSV are subject to limits on the number of symbols and volume traded;

2. A TSV must verify that the tokenized NMS stock made available for trading on the TSV provides holders the same rights and privileges as does traditional NMS stock of an equivalent class;

3. Before making available for trading a tokenized NMS stock that is tokenized by an unaffiliated third party, the TSV must provide written notice and an opportunity to object to the issuer of the underlying NMS stock;

4. Smart contracts used by a TSV must be auditable, public, and deployed on a public, permissionless distributed ledger;

5. A TSV must stop trading in a tokenized NMS stock concurrently with any stoppage of trading in the underlying NMS stock on the primary listing exchange; and

6. A TSV must provide public notice about its operations, trading activities, and the trading activities of its affiliates on the TSV.

Chair Atkins remarked on the CLARITY Act’s failure to advance in Congress this week “despite the tireless efforts of many” but proclaimed the order, entered today, brings onchain trading of certain tokenized securities into the digital age. He emphasized that while temporary, the order’s purpose is to resolve challenges that prevented responsible capital-raising innovation from occurring in the United States while simultaneously preserving market integrity, investor protection and federal anti-fraud and anti-manipulation securities laws. Atkins lastly said that since the innovation exemption is a work in progress toward potential rulemaking, stakeholders in the financial industry are invited to submit public comments on it. The Director of the Commission’s Division of Trading and Markets, Jamie Selway, stated “the division stands ready to work with interested parties seeking to operate a TSV and field questions from investors and market participants.”

Pertaining to exemption #1: what are TSVs and tokenized NMS stock? As defined, a “TSV” is an organization, association or group of persons that brings together buyers and sellers in tokenized NMS stock by: (a) providing more or more automated market makers and liquidity pools (collectively “AMM Liquidity Pools) for permissioned participants to interact and agree to trade terms; and (b) setting standards for persons to access trading on such AMM Liquidity Pools. Tokenized NMS stock is an NMS stock that is: (i) a security tokenized by, or on behalf of, the issuer of the underlying NMS stock; or (ii) a security tokenized by a third party that is unaffiliated with the issuer of the underlying NMS stock. Note, however, that tokenized NMS stock excludes securities involving a third party issuing a crypto asset that represents its own security providing synthetic exposure to an underlying security, e.g., a tokenized linked security or a tokenized security-based swap.

Pertaining to exemption #2: the “dealer” definition exemption for AMM liquidity pools. This part of the order specifically exempts from the dealer definition any liquidity provider in an AMM Liquidity Pool that supplies liquidity comprised of tokenized NMS stock using proprietary capital. The order similarly exempts AMM Liquidity Pools that engage in other dealer activities such as quoting prices to customers or entering into agreements to provide committed capital (involves a “covered firm” in connection with a “covered firm exemption”). The covered firm operating under this exemption must provide written notice to the Commission of its role as a covered firm, as well as disclose certain information (if applicable) on any public-facing website.

Also, note that for exemption #2 to be available, a liquidity provider’s securities activities must be limited to activities related to the trading of tokenized NMS stock in an AMM Liquidity Pool operating in accordance with the TSV exemption.

Remarks by Commissioners Peirce and Uyeda. Dovetailing onto SEC Chair Atkins remarks, SEC Commissioner Hester Peirce made two important points:

(a) the exemptions are available to U.S. persons, including incumbents and new entrants; and

(b) issuers not wanting their stock traded on TSVs can opt out.

Additionally, Commissioner Peirce said the order is not about decentralized finance. “Decentralized systems driven by automated software do not give rise to the foundational concerns underlying securities regulations, namely that an intermediary you trust to act on your behalf will be foolish, careless, or compromised.” Lastly, Peirce acknowledged that it is too soon to tell what regulatory categories TSVs and their liquidity providers fit into.

Commissioner Uyeda made the point that “while the application of existing laws and regulations is important, the Commission- should not impulsively attempt to limit emerging technologies by contorting them into legacy legal frameworks.” He applauded the Innovation Exemption as the latest instance of the Commission using scoped relief to experiment responsibly, learn, and translate old protections into new contexts.

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