What is the SEC innovation exemption?

The SEC innovation exemption is a temporary rule change from the US Securities and Exchange Commission that lets certain platforms trade tokenized stocks on blockchains. It was issued on September 17, 2026 under Chair Paul Atkins. It covers tokenized shares of listed US companies, not crypto tokens in general. How the products themselves work is covered in what are tokenized stocks.

What does the SEC innovation exemption allow?

The order, Release 34-106402, exempts a new type of platform called a Tokenized Securities Venue (TSV) from the legal definition of an exchange. TSVs run automated liquidity pools, a design similar to an automated market maker, where permissioned participants trade tokenized stocks. Firms that supply liquidity from their own capital are also exempted from the definition of a dealer.

The order does not limit who can take part. The text says participants can include retail investors, institutions or broker-dealers, but access must be permissioned and the venue must be a US person.

What conditions does the SEC crypto exemption set?

The SEC's press release and order list several conditions:

• Same rights. Each token must carry the same rights as an ordinary share of the same class. Price-tracking products do not qualify.
• Caps. The first tier allows 75 stocks and 0.25% of each stock's average daily share volume from the prior month. A second tier allows 250 stocks and 2.5%.
• Issuer notice. If a third party created the token, the venue must notify the company, which has 30 calendar days to object.
• Public code. Smart contracts must be auditable, public and run on a public, permissionless blockchain.
• Trading halts. Trading stops whenever the stock halts on its main exchange.
• Notice. A venue must post a public notice at least 30 days before it starts and tell the SEC within one business day.

The relief expires five years after publication in the Federal Register.

What was the Atkins innovation exemption originally meant to cover?

Atkins talked about an innovation exemption well before it appeared. Decrypt reported that in December 2025 he hoped to release exemptions in January 2026 that could cover tokenized securities, DeFi and other crypto areas. In late January he declined to commit to a date, after banks and the trade group SIFMA raised concerns.

The final order is narrower and deals only with tokenized stocks. In his statement on the order, Atkins called it an interim step that must be followed by lasting rules. It is separate from the work of the SEC crypto task force on other crypto assets, and from the question of whether a crypto asset is a security.

What is the status of the SEC innovation exemption as of October 2026?

The order is in effect, and the SEC is still taking comments on it. The SEC's Innovation Exemption page, last updated October 21, 2026, lists notices from three venues: TSV LLC, OKXICE TSV and Perpetuals.com. The SEC says a listing is not an approval and its staff does not review the notices.

Critics are using the comment process. In an October 19, 2026 letter, SIFMA asked for opt-in consent from companies instead of the 30-day objection model, stronger investor protections and formal rulemaking.

Rules differ by country and change often. Check the official regulator or a qualified professional for your own situation.