SEC grants five-year exemption for tokenized US stock trading

Overview

Updated 1 hour ago

The Securities and Exchange Commission (SEC) on Sept. 17 issued the Innovation Exemption, a five-year conditional order letting licensed venues trade blockchain versions of major US stocks. Stock tokens must carry the same dividends, voting rights, and other privileges as ordinary shares, and issuing companies can veto tokenization within 30 days of notice.

The order is the first concrete output of Project Crypto, the SEC's year-long push to move US stock trading onto blockchains. It arrived two days after the Senate blocked the CLARITY Act, a Trump-backed bill that would have set a statutory framework. The pilot is temporary and invites public comment; the SEC says durable rulemaking must follow before it expires.

Why it matters

Major US stocks can now trade as blockchain tokens on licensed venues, a step toward 24/7 markets, wider investor access, and issuer control over tokenization.

Questions about this story

Free account needed to ask — your question is kept and asked for you right after sign-up. Answers are public.

No questions yet — be the first to ask.

Key Indicators

5 years

Exemption duration

Conditional pilot relief expires five years after Federal Register publication.

Max tokenized symbols, most-liquid tier

Each venue can tokenize up to 75 of the most liquid stocks at 0.25% of average daily volume or less.

250

Max tokenized symbols, second tier

Second-tier stocks cap at 250 symbols per venue and 2.5% of average daily trading volume.

30 days

Issuer objection window

Trading venues must notify the issuing company and wait 30 days; an issuer veto blocks trading.

Voices

Curated perspectives — historical figures and your fellow readers.

Ever wondered what historical figures would say about today's headlines?

People Involved

Jamie Selway

Director of Trading and Markets, US Securities and Exchange Commission

Led design of the Innovation Exemption

Organizations Involved

U.S. Securities and Exchange Commission

Federal Agency

Issuing the Innovation Exemption under the Securities Exchange Act of 1934

The US federal agency that regulates securities markets, now extending conditional relief to blockchain-based stock venues.

Office of Foreign Assets Control (OFAC)

Federal Agency

Sanctions rules apply to tokenized stock venues

The US Treasury agency that administers economic and trade sanctions; tokenized venues must comply with its programs.

Timeline

September 2025 September 2026

3 events Latest: Yesterday

September 2026
SEC issues the Innovation Exemption
Latest Regulation

The SEC granted five-year conditional relief for tokenized stock venues and liquidity providers, effective immediately.
Yesterday
Senate blocks the CLARITY Act
Legislation

A Trump-backed digital-assets framework bill failed to advance in the Senate, leaving rulemaking to the SEC.
3 days ago
September 2025
SEC launches Project Crypto
Initiative

The SEC began modernizing securities rules to bring US financial markets onchain. (Approximate date.)
September 15th, 2025

Scenarios

SEC turns the Innovation Exemption into permanent rules

Possible Resolves by Sep 17, 2031

Discussed by: The SEC itself, which said the interim measure 'must be followed by durable rulemaking'; public comment opened immediately.

If venues launch, volumes stay inside their caps, and investor protections hold, the SEC converts the pilot into a standing regulatory category before it lapses. The order solicits comment on possible modifications, setting up a rulemaking track. An active five-year pilot with responsible operators would give the agency evidence to codify tokenized trading permanently.

Pilot stays niche and the exemption lapses

Possible Resolves by Sep 17, 2031

Discussed by: The caps themselves (75-250 symbols, sub-3% volume) and the issuer veto limit early ambition; industry watchers note companies may object to tokenization.

Few or no venues register, and issuer vetoes keep the largest stocks off-chain. Trading stays tiny and never approaches the volume caps, so the SEC lets the exemption expire without permanent rulemaking. Tokenized stock trading then returns to the regulatory gray zone or shifts to offshore venues.

Congress passes the CLARITY Act

Unlikely Resolves by Sep 17, 2027

Discussed by: The bill's backers, including President Donald Trump, who saw it fail in the Senate two days before the SEC's order; a renewed push is possible.

Lawmakers reintroduce and pass the CLARITY Act or equivalent digital-assets legislation, establishing a statutory onchain trading framework that supersedes or extends the SEC's exemption. The SEC's action gives Congress a working model to legislate around, potentially accelerating the bill's revival.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

1995-1998

Electronic Communication Networks and Regulation ATS (1990s)

In the mid-1990s, electronic networks like Island and Instinet matched buy and sell orders outside the New York Stock Exchange floor, cutting into the Big Board's monopoly. They operated under SEC no-action and exemptive relief because they did not fit the legal definition of an exchange.

Then

The networks grew rapidly, capturing a large share of Nasdaq volume and forcing traditional exchanges to modernize.

Now

In 1998 the SEC adopted Regulation ATS, formalizing electronic venues as alternative trading systems and creating the foundation for modern equities market structure.

Why this matters now

Same pattern as today: a new venue type runs on temporary SEC relief first, then gets codified into durable rules once it proves workable.

April 2012

JOBS Act crowdfunding (April 2012)

Congress created a new regulatory pathway for startup investing, letting ordinary investors buy private-company securities through licensed funding portals. The SEC wrote rules defining who could raise how much and under what disclosure conditions.

Then

Crowdfunding portals launched and the new rules expanded retail access to private securities, though activity grew slowly at first.

Now

The JOBS Act framework became a stable part of US capital formation, showing how regulators pair new access with investor-protection conditions.

Why this matters now

Illustrates how US regulators open new securities-trading channels by attaching conditions, exactly what the Innovation Exemption does for tokenized stocks.