Overview
- The SEC issued the five-year Innovation Exemption on Sept. 17, allowing qualifying Tokenized Securities Venues to list and trade tokenized National Market System stocks under immediate, conditional relief.
- Tokenized shares must carry the same economic and shareholder rights as the underlying stock, and venues must notify issuers and wait 30 days so companies can object and block tokenization.
- Venues must meet strict operational limits, including public auditable smart contracts on a permissionless ledger, caps on symbols and trading volume, and coordinated halts tied to the primary exchange to prevent decoupling.
- The order grants temporary, conditional relief for certain liquidity providers to use permissioned automated market makers and liquidity pools while the SEC monitors risks such as thin‑market volatility.
- The measure is an experiment: the SEC is seeking public comment, will use the results to consider rulemaking, and industry platforms are already signaling product changes to comply with the new conditions.