SEC Creates Five-Year Conditional Path for Onchain Trading of Tokenized U.S. Stocks
The SEC's September 17, 2026 temporary "Innovation Exemption" would let qualifying venues trade tokenized versions of exchange-listed U.S. stocks onchain for five years, a shift for broker-dealers and custodians.
On September 17, 2026 the Securities and Exchange Commission issued a temporary "Innovation Exemption" intended to facilitate onchain secondary trading of tokenized U.S. exchange-listed stocks, according to a White & Case client alert. The relief is framed as a five-year conditional pathway rather than a rulemaking, so its practical value will turn on conditions the summary does not set out — which entities and venues qualify, what token form and custody arrangements are permitted, and how disclosure, settlement finality and surveillance obligations compare with the equivalent Reg NMS equity framework.
For major-firm clients the interest is structural. Broker-dealers and exchanges evaluating whether to list or support tokenized equities; banks and qualified custodians weighing whether token balances can sit in client accounts; and issuers, market makers and fintechs looking for a compliant onchain venue all need to know whether the exemption alters distribution economics, margin and collateral treatment, or the location of books-of-record and regulatory responsibility.
The immediate action is diligence, not structuring: teams should read the exemption text and its conditions directly rather than rely on summaries, and start mapping where existing clearance, custody and best-execution obligations would attach to tokenized secondary trading. Expect interpretive questions and possible challenges to the conditional relief over the five-year term, and watch for compliance deadlines, approved-participant lists and any accompanying proposed rulemaking.