SEC Creates 'Innovation Exemption' for Tokenised Stock Trading via On-Chain AMMs

SEC Clears Path for Tokenised Stock Trading via On-Chain AMMs

The U.S. Securities and Exchange Commission issued an order on 17 September 2026 creating what it describes as an "Innovation Exemption" to facilitate the trading of tokenised National Market System (NMS) stocks through on-chain automated market makers. The order is accompanied by a request for public comment and is recorded in the federal public inspection system as document 2026-01823.

The SEC's press release — published as release 2026-90 — confirms the broad contours of the framework. Tokenised versions of U.S.-listed stocks may be traded through on-chain AMM mechanisms, provided that holders of stock tokens retain the same rights they would hold as traditional stockholders. Beyond that requirement, the precise conditions and eligibility criteria of the exemption are not fully characterised here, as the primary order documents were not accessible at the time of publication due to rate-limiting on SEC servers. This article is based on the SEC press release and corroborating secondary reporting, pending full document accessibility.

The exemption requires that holders of stock tokens retain the same rights they would have with traditional stocks — a condition that, in regulatory terms, positions the framework as an extension of existing investor protections rather than a departure from them.

A Regulatory Pathway Built on Earlier Groundwork

The Innovation Exemption does not emerge without precedent. Secondary sources — including analysis published by Carlton Fields and Fintech and Digital Assets — document that the Depository Trust Company received an SEC staff no-action letter related to a tokenisation pilot that preceded this exemption. Commissioner Hester Peirce published a statement on that no-action letter, the content of which could not be reviewed at time of publication as the document was inaccessible due to rate-limiting.

The DTC's earlier pilot appears, based on available secondary reporting, to have helped establish the regulatory groundwork that the September 2026 order now builds upon.

What the Order Does — and What Remains Open

The Innovation Exemption, as described in the SEC press release and corroborated by reporting from CNBC and FinanceFeeds, centres on enabling tokenised NMS stock to be traded via on-chain AMMs while preserving stockholder rights. Whether the exemption's scope extends to the mechanics of how such tokens are issued, transferred and settled on distributed ledger infrastructure is consistent with the order's apparent purpose — but this should be treated as pending confirmation against the full primary text.

Among the questions the exemption does not appear to address — though this is the publication's own analytical read of what typically remains open in such frameworks, pending full text review — are issues around custody, clearing, investor protection standards and the interaction with existing broker-dealer obligations. These categories of open question are standard features of securities-law innovation frameworks, and the SEC's accompanying request for comment suggests regulators anticipate that the framework will evolve.

No specific companies, platforms or brokers have been confirmed as participants in the exemption by any successfully read source.

European Context

In regulatory terms, the SEC's approach invites comparison with the European Union's DLT Pilot Regime, which created a sandbox permitting certain distributed ledger-based trading and settlement infrastructure to operate under modified rules. Analysts have noted that the EU framework has attracted relatively modest uptake; the precise causes are a matter of ongoing regulatory and industry discussion rather than established fact this publication can independently verify from sources within its research package.

Whether the SEC's exemption model — applied to the NMS, one of the world's most liquid equity markets — generates data or precedent that European policymakers find useful, or feel pressure to respond to, is a reasonable question for the period ahead. The SEC's request for comment indicates the framework is explicitly designed to produce evidence, not merely to permit activity.

What Comes Next

The public comment process attached to the order means the Innovation Exemption's current parameters are not final. The full text of the order, once accessible, is expected to clarify the conditions under which the exemption applies, the obligations on market participants and the scope of the AMM trading mechanisms permitted. The Federal Register document 2026-01823 is the relevant public inspection reference for those seeking the formal regulatory text.