The US Securities and Exchange Commission (SEC) has granted temporary, conditional relief allowing a new category of venue to trade tokenised US equities without registering as an exchange.
The move comes two days after the ClarityAct – a proposal designed to establish a regulatory framework for digital assets – stalled in the Senate. 
Under the order, issued on Thursday, so-called Tokenised Securities Venues (TSVs) are exempt from the definition of “exchange” under the Securities Exchange Act of 1934 when they bring together buyers and sellers of tokenised National Market System (NMS) stock through permissioned automated market makers and liquidity pools.
Trade associations have been previously wary of this approach. In submissions to the SEC late last year, SIFMA warned that broad relief risked creating “parallel, but unequal trading ecosystems for substantively identical assets”, while the World Federation of Exchanges said it was “alarmed” at platforms marketing so-called tokenised US stocks.
Cboe argued that rulemaking rather than exemptive relief would better “ensure a level playing field amongst market participants and preserve the integrated national market system”.
Proponents of the exemption – and tokenisation in general – say this would allow shares to trade around the clock and settle instantly, deepening liquidity and cutting transaction costs.
Separately, the order also grants conditional relief from the “dealer” definition in section 3(a)(5) of the Exchange Act to firms supplying liquidity to those pools in the form of tokenised NMS stock using proprietary capital, including where they are also quoting prices to customers or entering into agreements to provide committed capital.
“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 on-chain trading of certain tokenised stocks through the ‘Innovation Exemption’,” said SEC chairman Paul Atkins.
Lack of Clarity
In an accompanying statement, Atkins was explicit about the legislative backdrop: “Congress was unsuccessful in advancing the Clarity Act despite the tireless efforts of many.”
The Digital Asset Market Clarity Act failed a Senate cloture vote 49-50 on Tuesday 15 September, well short of the 60 votes required, ending the industry’s market structure push for 2026 despite a late appeal from Senator Cynthia Lummis.
With crucial November midterms around the corner and the end of the current congressional session, the SEC and the Commodity Futures Trading Commission (CFTC) are now the only live route to a US framework for digital asset markets.
Atkins framed the exemption as an interim measure rather than a settlement, which expires five years after publication.
“The Commission is not cementing today’s technology as the standard for tomorrow,” he said, before adding that “this interim measure must be followed by durable rulemaking to ensure that on-chain markets remain a viable pathway as our capital markets continue to evolve.”
On investor protection, he said: the anti-fraud and anti-manipulation provisions of the federal securities laws “apply in full to all securities activities in these markets”.
Terms and conditions
The relief is heavily caveated. TSVs face limits on both the number of symbols and the volume traded. Critically for issuers and their agents, a TSV must verify that a tokenised NMS stock confers on holders “the same rights and privileges” as traditional stock of an equivalent class, addressing the concerns about synthetic security tokens that stalled the relief in May.
Where a stock has been tokenised by an unaffiliated third party, the venue must give the issuer of the underlying security written notice and an opportunity to object before listing it. Smart contracts must be auditable, public and deployed on a public, permissionless distributed ledger.
Venues must halt trading in a tokenised stock concurrently with any halt on the primary listing exchange, and must publish information on their own operations and trading activity as well as that of their affiliates.
The order is silent, however, on how tokenised positions held on-chain reconcile with the existing clearing and settlement infrastructure, leaving open the treatment of NSCC netting, DTC custody, transfer agency and corporate actions processing in a structure where the same-rights test must be continuously satisfied.
“Today’s approval of exemptive relief for on-chain secondary trading on a TSV marks an important milestone for the Commission’s work to open our capital markets for tokenised securities,” said Jamie Selway, director of the SEC’s division of trading and markets, adding that the division “stands ready to work with interested parties seeking to operate a TSV”.
The order lands after two abandoned attempts to publish it. The SEC drew back in May over concerns about synthetic security tokens, and cancelled a scheduled open meeting in mid-August amid questions over its legal authority, the adequacy of its economic analysis and White House unease about disturbing live congressional negotiations.
Commissioner Mark Uyeda published a supporting statement alongside the order, noting that the Commission has previously used its exemptive authority to introduce money market funds, index funds and exchange-traded funds.
“Technological innovation often outpaces rulebooks,” he said.
The Commission is seeking comment on all aspects of the relief, including possible modifications and next steps.