SEC Chairman Paul Atkins stated the exemption is "designed to resolve challenges that have prevented responsible innovation from taking root in the United States while providing investor protections and market integrity standards."

Under the new framework, holders of stock tokens must retain the same rights they would have with traditional equity holdings, including dividends and voting rights. Trading platforms must notify the company of their intention to tokenize shares and wait 30 days after the company receives the notice before starting trading.

Companies can object to and prevent their security from trading as a token if notified by the trading venue. The exemption does not apply to synthetic tokens issued by third parties that mimic share prices but do not confer ownership. The Innovation Exemption includes volume limits to mitigate potential risks and major price swings.

Robinhood plans to let stock-token holders redeem their tokens for the underlying shares on a 1:1 basis and add voting rights. The combined market value of tokenized assets reached $38.51 billion as of Thursday afternoon, up more than 70% over the past year.

Timeline

The SEC approved Nasdaq's plan to allow some tokenized stocks and exchange-traded funds in March 2026. The Securities and Exchange Commission issued an order on Thursday creating a regulatory pathway for certain trading venues to issue tokenized representations of publicly traded U.S. stocks.

The Innovation Exemption was issued by the U.S. Securities and Exchange Commission on September 17, 2026, and it provides a five-year conditional exemptive relief to facilitate the permissioned trading of tokenized NMS stock using automated market makers and liquidity pools.

What's New

The Innovation Exemption was issued by the U.S. Securities and Exchange Commission on September 17, 2026, and it provides a five-year conditional exemptive relief to facilitate the permissioned trading of tokenized NMS stock using automated market makers and liquidity pools.

A study titled FROM MARKETS TO VENUES: SECURITIES REGULATION IN AN EVOLVING WORLD was published in 2005 in bepress Legal Repository. Paul Stewart Atkins has served as chair of the U.S. Securities and Exchange Commission since April 2025.

Why It Matters

The Innovation Exemption establishes a conditional exemptive relief structure that facilitates the permissioned trading of tokenized NMS stock using automated market makers and liquidity pools. This regulatory pathway addresses a market where the combined value of tokenized assets reached $38.51 billion as of Thursday afternoon, representing an increase of more than 70% over the past year.

The order follows previous regulatory actions, including the approval of Nasdaq's plan to allow some tokenized stocks and exchange-traded funds in March 2026. By requiring trading platforms to notify companies and wait 30 days, the SEC creates a mechanism for issuers to object to tokenization while allowing venues to proceed if no objection is raised. The inclusion of volume limits aims to mitigate potential risks and major price swings in this evolving sector.