SEC Greenlights Pilot for On-Chain NMS Stock Trading
A temporary SEC order creates a path for on-chain secondary trading of tokenized stocks, exempting qualifying venues from the 'exchange' definition and certain automated market maker liquidity providers from the 'dealer' definition.
The US Securities and Exchange Commission issued a five-year "Innovation Exemption" order creating a temporary, conditional pathway for on-chain secondary trading of tokenized NMS stocks. With market-structure legislation stalled, the SEC is using its exemptive authority to foster a controlled experiment in tokenized equity trading. The order provides legal certainty by exempting qualifying tokenized securities venues (TSVs) from the definition of an "exchange" and certain automated market maker (AMM) liquidity providers from the definition of a "dealer." This opens a new, albeit narrow, avenue for financial and technology firms to develop and test blockchain-based trading systems for traditional securities.
Reliance on the exemption is notice-based but requires adherence to strict guardrails, including volume caps, permissioned access, public data reporting, and a right for underlying issuers to object to third-party tokenization. The order does not affect antifraud laws or other registration requirements. The SEC is soliciting comment on making the framework permanent, and market participants should monitor its implementation and any further agency guidance.