SEC Establishes Temporary Framework for Blockchain-Powered Securities

U.S. regulators establish temporary guidelines for tokenized securities, balancing blockchain innovation with investor rules.

Blockchain-based trading of traditional stocks is moving closer to wider regulatory acceptance in the United States. The U.S. Securities and Exchange Commission has approved a temporary framework for platforms offering tokenized versions of certain U.S. stocks. The decision allows approved venues to use onchain automated market makers while regulators review future rules for digital securities markets. 

Tokenized Securities Gain New Regulatory Framework

The SEC announced the “Innovation Exemption” on September 17, 2026, giving temporary regulatory relief to Tokenized Securities Venues (TSVs). These platforms can trade tokenized National Market System (NMS) stocks through permissioned automated market maker liquidity pools.

Under the exemption, TSVs are allowed to operate without being classified as the traditional definition of an exchange under the Securities Exchange Act of 1934. However, platforms must meet strict requirements before offering tokenized stock trading.

According to the statement, tokenized shares available on TSV platforms must represent real securities. Holders must receive the same rights as owners of traditional shares. These rights include dividend payments and voting privileges connected to the underlying stock.

The SEC also rejected synthetic versions of tokenized stocks under the new framework. Eligible tokenized securities must come from the original issuer or a third party that is not affiliated with the issuer and meets SEC requirements.

Additional requirements cover access rules, trading limits, and public information. Only approved participants can trade on TSV platforms. Smart contracts used by these venues must be publicly available, auditable, and built on public permissionless blockchains.

Trading activity on a TSV must also match any suspension of the related stock on its main exchange. Platforms must disclose details about their operations and related trading activities.

SEC Sets Five-Year Review Period for Tokenized Markets

Alongside TSV approval, the SEC granted temporary relief for certain liquidity providers. Covered firms that provide tokenized stock liquidity using their own capital may receive exemption from dealer registration rules under specific conditions.

SEC Chairman Paul S. Atkins said the decision is connected to Project Crypto, an agency effort focused on updating securities regulations for blockchain-based markets. He said the exemption gives regulators time to study onchain trading while maintaining existing investor protection rules. 

The SEC stated that existing anti-fraud and anti-manipulation laws still apply to tokenized securities markets. The exemption includes sanctions compliance rules and requires TSVs to operate as U.S. entities.

The order will remain active for five years after publication. During that period, the SEC will collect public feedback and review whether additional regulatory changes are needed.

The agency said the temporary framework is not a final technology standard. Instead, regulators will observe market developments before deciding on permanent rules for tokenized stock trading.