September 23, 2026
Tokenized equity trading has been on the rise (Exhibit 1), demonstrating the value that blockchain-based infrastructure brings to capital markets. But most of the activity today takes place offshore using derivative-like “wrapper” assets. The SEC’s recent “Innovation Exemption” ruling will likely change that, as it aims to bring onchain trading of tokenized stocks to the regulated US financial system and to assets that offer holders full voting rights and dividends.
Specifically, the SEC’s order temporarily relaxes two types of registration requirements: (i) qualifying trading venues will not need to register as exchanges and (ii) qualifying liquidity providers will not need to register as dealers. The exemptions are intended to facilitate trading of tokenized securities in a manner consistent with US securities laws. For example, while most volume today is permissionless, a whitelisted address could swap a tokenized stock for stablecoins via a permissioned Uniswap pool.
The order includes many qualifying criteria and limitations. Transactions must take place on public blockchains, participants must be permissioned, and trading venues must make public disclosures before any operations. All rules related to fraud and manipulation, AML/CFT compliance, and OFAC screening still apply. In addition, the order expires in five years, is limited to a certain number of listings, and has capped trading volume.
This is not the final form of tokenized securities markets, but a crucial first step to allow tokenized security markets to continue to mature. SEC Chairman Paul Atkins described the order as a “interim measure” that “must be followed by durable rulemaking.”
We expect that the Innovation Exemption will help tokenized equity markets develop further and demonstrate that blockchain-based trading infrastructure can be made fully compatible with compliance needs and investor protections. If successful, we expect it will be followed by a broadening of the scope—and hopefully bipartisan legislation by Congress—down the road.
Key Takeaway: The SEC’s Innovation Exemption will support the growth of tokenized equity markets and help demonstrate that blockchain-based trading infrastructure can be made fully compatible with compliance needs and investor protection.
Exhibit 1: Tokenized equity trading was already on the rise
