SEC approves five-year exemption for tokenized stock trading in US markets

Five-year regulatory framework

The US Securities and Exchange Commission issued an order on 17 September 2026 granting conditional five-year exemptions for trading blockchain-based representations of traditional equities. The regulatory measure, titled the Innovation Exemption, allows digital asset platforms and automated liquidity providers to operate without facing full exchange and dealer registration requirements. The action opens the 75 trillion dollar US equity market to on-chain trading infrastructure, allowing shares to be bought and sold via distributed ledgers.

SEC Chair Paul Atkins stated that the framework aims to balance technical progress with regulatory compliance.

The Innovation Exemption is designed to resolve challenges that have prevented responsible innovation from taking root in the United States while providing investor protections and market integrity standards.

Issuer consent and investor protections

Under the terms of the order, trading venues must provide written notice to corporate issuers at least 30 days before offering tokenized versions of their shares. Companies retain the right to object, which prevents platforms from listing tokens tied to their equity. Tokens permitted under the exemption cannot be synthetic derivatives; they must confer direct shareholder rights, including dividends and proxy voting rights.

Trading in tokenized shares must halt automatically whenever traditional exchanges halt trading in the underlying stock. These conditions address friction observed in overseas markets, where retail brokerages have offered synthetic stock tokens without corporate consent. Earlier in September 2026, AMC Entertainment chief executive Adam Aron criticized offshore offerings by Robinhood on X.

We have no connection to this at all, and do not condone it in any way

Legislative stall in the Senate

The regulatory action followed a procedural vote on 15 September 2026 that blocked the Clarity Act in the US Senate. The proposed crypto market-structure bill stalled after Senate Democrats demanded stricter limits regarding Donald Trump's financial interests in digital asset ventures. CoinShares analysts noted that while the legislative vote was a delay, the primary hurdles facing comprehensive statutory reform remained political rather than technical.

Following the stalled legislation, the agency used its statutory authority to establish rules for domestic tokenization. The commission confirmed that the five-year order took effect immediately while opening a public comment period to guide permanent rulemaking.

Transition from offshore models

The framework requires crypto firms to adjust their international operational structures if they intend to launch tokenized stock services within the United States. Platforms such as Robinhood and Kraken parent Payward currently offer stock tokens overseas that operate as price-tracking derivatives without direct voting rights. Coinbase has indicated plans to introduce compliant tokenized equity products domestically under the new rules.

Alongside the order, the agency convened talks with market participants on 17 September 2026 to assess round-the-clock trading. Proponents of on-chain trading point to 24/7 market hours, instant trade settlement, fractional ownership, and self-custody options as operational changes from legacy clearing systems.

SEC Chair Paul Atkins framed the order as a controlled step toward broader market adoption.

The Innovation Exemption, while temporary, would allow TSVs to trade tokenized NMS stock in a permissioned environment today while the Commission considers the need for additional action to facilitate on-chain trading.