One order contains two exemptions

SEC Order 34-106402 establishes what the regulator calls the Innovation Exemption. It actually contains two separate forms of relief. One applies to Tokenized Securities Venues, or TSVs, allowing qualifying venues to conduct this specific activity without being treated as conventional exchanges under the relevant Exchange Act definition.

The second exemption applies to certain liquidity providers supplying tokenized shares to automated market-maker pools with proprietary capital, including firms whose other activities might normally trigger dealer-registration requirements.

The exemptions are scheduled to expire five years after publication. The SEC is also requesting public comment while it considers whether a more permanent rule set should follow the temporary framework.

The tokens must preserve shareholder rights

The eligibility requirement sharply limits what can be called a tokenized stock under this framework. A platform cannot simply create an asset that tracks the market price of Apple, Nvidia or another listed company while giving the holder no actual equivalent shareholder rights.

The SEC requires qualifying tokenized NMS stock to provide the same rights and privileges as the corresponding class of conventional stock. Those rights include the ability to receive dividends and exercise voting rights where applicable.

Purely synthetic products designed only to mimic the price performance of a stock therefore fall outside this exemption.

Public companies can object

The framework also addresses situations where an unaffiliated third party tokenizes another company's shares. Before such a token can be made available on a TSV, the venue must provide written notice to the issuer of the underlying stock and give that company an opportunity to object.

That means a listed company can prevent its stock from being offered in tokenized form on one of these venues when the tokenization is being carried out by an unrelated party.

Public blockchains with permissioned participation

The infrastructure combines open blockchain technology with controlled market access. Smart contracts used by a TSV must be auditable and public, and they must be deployed on a public, permissionless distributed ledger.

Access to the trading venue itself is nevertheless permissioned. The TSV sets standards determining who can participate in its automated market-maker liquidity pools. The exemption therefore does not create an unrestricted public equities market that anyone can enter anonymously.

Trading must also stop when the conventional underlying stock is halted on its primary listing exchange. The tokenized venue cannot continue trading independently through an official halt in the corresponding security.

DeFi-style market making enters the stock market experiment

One of the more technically significant parts of the exemption is its acceptance of automated market makers and liquidity pools for tokenized listed stocks. Those mechanisms are far more closely associated with decentralized-finance markets than with traditional US equity trading.

Instead of relying exclusively on a conventional order book matching individual bids and offers, AMM liquidity pools can use deposited assets and smart-contract rules to provide prices and execute transactions.

The SEC is limiting the experiment. Tokenized Securities Venues face restrictions on both the number of symbols offered and the volume traded, and they must make information about their operations and relevant affiliate trading activity publicly available.

This is not blanket deregulation of tokenized stocks

The exemption does not remove tokenized equities from US securities law. It grants conditional relief from specific regulatory definitions for specific participants operating within the framework.

SEC Commissioner Hester Peirce had emphasized the broader legal principle in 2025: tokenizing a security does not magically change the nature of the instrument. A security remains a security even when blockchain technology is used to represent ownership or facilitate transfer.

The SEC is using the experiment to inform future rules

Peirce returned to the exemption on September 23 during SIFMA's Digital Assets Conference, describing it as a time- and size-limited framework for tokenized securities trading through automated market makers. She explicitly noted that her remarks represented her own views as a Commissioner rather than necessarily those of the SEC as a whole.

SEC Chairman Paul Atkins had described the September 17 action as a bridge toward more durable rulemaking. The Commission is seeking public input on possible changes to the temporary framework and on what regulatory steps should follow.

The crypto-equity boundary is becoming an infrastructure question

The underlying financial asset in this experiment is not new. Investors are still meant to hold the economic and governance rights associated with conventional shares. What changes is part of the infrastructure used to represent, transfer and trade those rights.

That moves the tokenization debate beyond synthetic exposure that merely imitates stock prices. The US experiment is testing whether conventional securities, with their existing legal rights and market protections, can be traded through public blockchain infrastructure and smart-contract-based liquidity systems without abandoning the securities framework surrounding them.

Primary factual sources: SEC Order 34-106402 and Release 2026-90 dated September 17, 2026; statements by Paul S. Atkins and Hester M. Peirce dated September 17 and September 23, 2026; Reuters, September 17, 2026.