SEC Issues Five-Year Exemption for On-Chain Stock Trading, One Day After Clarity Act Fails in Senate (September 17, 2026)

The Securities and Exchange Commission announced a temporary exemption allowing Tokenized Securities Venues to trade tokenized National Market System stock using permissioned automated market makers and liquidity pools, without registering as exchanges under the Securities Exchange Act of 1934. The exemptions expire five years after publication.

The move came on September 17, 2026, one day after the Senate blocked the Clarity Act in a procedural vote, with lawmakers voting 49 to advance and 50 against. SEC Chairman Paul Atkins said in a statement: "Congress was unsuccessful in advancing the Clarity Act despite the tireless efforts of many." Hours later, the SEC announced the Innovation Exemption, with Atkins stating: "Today, the Securities and Exchange Commission is taking a significant step forward, within its statutory authority, to bring America's capital markets into the digital age by facilitating onchain trading of certain tokenized stocks through the Innovation Exemption."

Under the exemption, Tokenized Securities Venues will bring together buyers and sellers of tokenized NMS stock by providing one or more automated market maker liquidity pools for permissioned participants to interact and agree to trade terms, and by setting standards for persons to access trading on such pools. The SEC also granted a conditional exemption from the definition of "dealer" to liquidity providers in AMM Liquidity Pools who supply liquidity in tokenized NMS stock using proprietary capital and may engage in additional dealing activities, such as quoting pricing to customers or committing capital.

According to CoinDesk's reporting, the exemption subjects trading to unspecified trading limits and transparency rules. The SEC's press release, however, does not detail what those limits or rules are. The order also solicits public comment on possible modifications to the exemptive relief and potential next steps. Jamie Selway, Director of the SEC Division of Trading and Markets, said: "Today's approval of exemptive relief for on-chain secondary trading on a TSV, known as the Innovation Exemption, marks an important milestone for the Commission's work to open our capital markets for tokenized securities."

The Clarity Act, which failed in the Senate, aimed to formally divide oversight between regulators and distinguish which digital assets are securities, commodities, or stablecoins. The SEC's exemption sidesteps that legislative framework by acting unilaterally under its existing statutory authority to grant exemptive relief.