SEC Grants Conditional Relief for Onchain Tokenized Stock Trading

The Securities and Exchange Commission issued an order establishing the Innovation Exemption, granting temporary, conditional relief to enable onchain trading of certain tokenized equities under Section 36(a)(1) of the Securities Exchange Act of 1934 ¹. The move follows the failure of Congress to advance the CLARITY Act ¹.

The exemption creates two primary carved-out categories under federal securities rules ¹. First, qualified platforms designated as Tokenized Securities Venues are exempt from the standard exchange definition under Section 3(a)(1) of the Exchange Act ¹. Second, participating market makers—classified as Covered Firms—receive relief from dealer registration under Section 3(a)(5) ¹. Anti-fraud and market manipulation statutes will continue to apply across all activity ¹.

Safeguards and Compliance Conditions

Relief under the order carries strict operational mandates ¹. Participating venues must qualify as U.S. persons and maintain full compliance with sanctions enforced by the Office of Foreign Assets Control ¹. Access must remain permissioned, restricting trading in tokenized National Market System equities exclusively to vetted market participants ¹.

Additionally, the order bars synthetic instruments ¹. Tokenized equities must either be created directly by the issuer or by an unaffiliated third party, provided the tokens confer identical rights to conventional shares, such as corporate dividends and voting privileges ¹. Corporate issuers also retain the authority to forbid their shares from trading on these platforms ¹.

At the time of writing, broader digital asset markets traded slightly lower, with $BTC changing hands at $83,821 and $ETH at $2,673. The SEC characterized the temporary exemption as an interim framework designed to collect empirical market data ahead of permanent, durable rulemaking for onchain capital markets ¹.