SEC clears temporary framework for limited onchain trading of tokenized U.S. stocks

The U.S. Securities and Exchange Commission on Sept. 17 approved a temporary framework that permits limited onchain trading in tokenized U.S. equities under strict conditions. The order grants Tokenized Securities Venues conditional relief from being treated as an "exchange" under the Securities Exchange Act, creating a regulated pathway for tokenized securities without rewriting broader market structure rules. The SEC said the approach is designed to allow controlled live-market activity and data collection ahead of longer-term rulemaking. Under the framework, approved venues may facilitate permissioned trading using automated market makers and liquidity pools, bringing buyers and sellers together through designated pools while setting participant access standards. The SEC imposed caps on eligible symbols and transaction volumes. Each venue must also verify that tokenized shares provide the same economic and governance rights as the equivalent National Market System-listed stock. Chairman Paul Atkins said the structure enables limited trading while the Commission considers additional regulatory action. The order also adds issuer protections when tokens are created by third parties: a venue must notify the underlying issuer before listing tokens minted by an unaffiliated party, and the issuer must be given an opportunity to object. Technology and disclosure requirements are central. Smart contracts used by a venue must be public and auditable, and the SEC required deployment on public, permissionless distributed ledgers. The SEC said it relied on Section 36(a)(1) of the Exchange Act, which allows conditional or unconditional exemptions in the public interest and for investor protection. The order provides two types of temporary relief: one for venues that would otherwise fall within the statutory definition of an exchange, and another for certain liquidity providers using proprietary capital within approved AMM pools, giving those firms conditional relief from the statutory "dealer" definition. Federal antifraud and antimanipulation provisions remain in force. Commissioner Mark Uyeda said transaction transparency is a core condition, requiring venues to publish U.S. dollar-denominated trade data at regular intervals, including price, size, time, pool address, end-of-day pool size and daily volume. Uyeda said the disclosures are intended to support oversight and future policy assessment. The order also ties onchain trading to traditional market controls. A Tokenized Securities Venue must halt trading whenever the primary listing exchange pauses the underlying stock. Venues must publish operational information, trading activity details and affiliate activity disclosures, and maintain books and records along with technology safeguards and coordination procedures for trading stoppages. The framework follows the policy direction Atkins outlined earlier this year. On Feb. 18, he said the agency was evaluating limited tokenized securities trading via AMMs, later describing the concept as an interim framework while the Commission develops longer-term rules. SEC staff also collected industry feedback through the agency's Crypto Task Force during 2026, drawing competing views. Submissions from the Securities Industry and Financial Markets Association warned that broad exemptions could fragment markets and enable regulatory arbitrage, while other commenters supported limited exemptions with defined caps and disclosure requirements. The exemption will expire five years after publication, the SEC said. The Commission is also seeking public comment on potential changes and future regulatory steps. Uyeda urged commenters to submit data, case studies, incident analyses and operational evidence from live or test environments to inform future rules for tokenized securities and onchain market infrastructure. The SEC described the framework as a controlled market test rather than a blanket authorization for all tokenized equities. The next milestone will be publication of the order in the Federal Register, after which market participants can follow the comment process and any additional SEC guidance for prospective Tokenized Securities Venues. This article is for informational purposes only and does not constitute financial, investment or legal advice. Regulatory exemptions and securities rules remain subject to SEC conditions, modification and future rulemaking.