The SEC has introduced a five-year "Innovation Waiver," allowing eligible platforms to trade tokenized U.S. stocks with full shareholder rights, thereby establishing a limited, conditional compliance pathway for the U.S. on-chain securities market. This policy could create new business opportunities for platforms like Robinhood and Coinbase while intensifying competition with traditional exchanges; however, synthetic tokens are excluded, issuers retain veto rights, and key regulatory issues such as brokerage, custody, and clearing remain unresolved.
On September 17, the U.S. Securities and Exchange Commission (SEC) issued a five-year "Innovation Waiver" subject to stringent conditions, establishing for the first time a dedicated federal exemption pathway for on-chain trading of tokenized NMS shares under a licensed AMM model, thereby defining a compliance framework for the on-chain trading of tokenized U.S. equities. This move circumvents the legislative gridlock in Congress and has been interpreted by the market as a pivotal turning point marking the transition of tokenized securities from offshore jurisdictions to the U.S. domestic market.
SEC Chairman Paul Atkins issued this order two days after the Senate failed, by a vote of 49 to 50, to advance the CLARITY Act on September 15, and stated clearly: "Regardless of whether legislation is enacted, the SEC will act within its existing authorities. This order does not constitute a wholesale deregulation of tokenized securities; rather, it temporarily exempts eligible tokenized‑security trading venues from being classified as "exchanges" under the Securities Exchange Act, and grants certain liquidity providers a limited exemption from the definition of "broker.""
This policy is favorable to crypto-native platforms. According to a Morgan Stanley research report, the exemption framework is expected to expand.$Robinhood (HOOD.US)$ 、 $Coinbase (COIN.US)$and$Gemini Space Station (GEMI.US)$This will expand the product offerings and profit margins of crypto-native broker-dealers, while intensifying competitive pressure on traditional exchanges. Meanwhile, on the same day, the CFTC broadened the scope of its no‑enforcement policy for digital assets, providing a clearer pathway for wallet providers and passive front‑end software vendors to connect to regulated derivatives markets.
However, for platforms such as Robinhood, Coinbase, and Gemini, this framework offers a potential gateway to the U.S. market—though it does not grant automatic approval. Platforms must adopt an AMM structure that complies with TSV requirements; moreover, existing overseas equity tokens that merely provide price exposure without conferring full shareholder rights cannot be directly replicated in the United States.
The core of the exemption framework: what to liberalize, and what to retain under control.
The core mechanism of this exemption is the establishment of a new type of trading venue—the Tokenized Securities Trading Venue (TSV). A TSV may facilitate trading among authorized participants through one or more AMM liquidity pools, and it can operate by simply filing a notice with the SEC, without first completing full exchange registration.
Public blockchain infrastructure has received official endorsement, but access remains subject to a permissioned model. Smart contracts must be deployed on an open, permissionless distributed ledger that is auditable and publicly accessible; however, participants seeking to join liquidity pools are required to undergo eligibility verification. In other words, while the underlying layer is a public blockchain, those entering the pools must meet established准入 thresholds.
Tokens must confer full shareholder rights, with synthetic tokens explicitly excluded. Token holders must enjoy the same rights as traditional shares of the same class, including dividend entitlements and voting rights. In its order, Atkins specifically states "No Synthetics": synthetic tokens that merely provide price exposure without conferring shareholder rights are not covered by this exemption.
The issuer reserves the right of veto. Prior to listing a third-party tokenized asset on TSV, the issuer must provide written notice and afford the issuer an opportunity to object; if the issuer objects, trading shall be prohibited. Silence shall be deemed consent. This means that if the issuer does not wish its shares to be listed on TSV, it may withdraw directly.
The scope of the exemption is clearly defined. The order provides only temporary relief at the exchange and broker‑dealer level and does not extend to other securities‑law requirements, such as those pertaining to brokerage, custody, customer protection, or clearing. Anti‑fraud and anti‑manipulation provisions remain fully applicable. There are caps on the number of tradable symbols and on trading volume, and periodic public disclosure is required for data including prices, volumes, timestamps, the address of the liquidity pool, the end‑of‑day pool size, and daily trading volume.
Policy Context: Legislative Stalemate Spurs Regulatory Action
This exemption is the result of the SEC circumventing congressional legislative gridlock within its existing legal authority.
Market analysts contend that the fundamental obstacle to industry development has consistently been the definition of "exchange" and "trader" under the Securities Trading Act. The current regulatory framework, designed around order books and registered trading venues, is being applied directly to AMMs—either compelling protocols to retrofit themselves into traditional exchanges or leaving projects mired in legal uncertainty for the long term.
SEC Commissioner Mark Uyeda traced this exemption back to the SEC's historical precedents: money market funds, index funds, and ETFs were all first tested through limited exemptions before being incorporated into permanent rules. In the National Securities Markets Improvement Act, Congress expanded the general exemption authority precisely to address situations where existing requirements no longer align with emerging market structures.
On the timeline, Atkins incorporated the exemption as an extension of his "Project Crypto," launched about a year ago with the goal of enabling federal securities laws to support the market's transition to on-chain operations. From March to April 2026, Nasdaq, the NYSE, and others were authorized to advance tokenization within their existing clearing systems. Meanwhile, another path sought by the industry—transforming AMMs into traditional exchanges while still supporting secondary on-chain trading of listed stocks—was temporarily stalled and postponed in May due to opposition from exchanges and other stakeholders to synthetic tokens.
The legislative path was officially blocked on September 15. In a procedural vote on the Senate's CLARITY Act, the measure failed to secure the 60 votes required to advance, falling short by a margin of 49 to 50. The following day, Atkins made it clear that, regardless of the legislative outcome, the SEC would take action within its existing authorities. Two days later, the exemption order was issued.
Reactions from various parties: Positions are divided but overall positive.
Regulatory officials have expressed mixed views internally, but the overall tone remains positive. Atkins characterized the exemption as "a bridge to enduring rules," cautioning against enshrining today's technical approaches as tomorrow's permanent standards, while also stipulating that compliance must satisfy four key constraints: OFAC sanctions, licensing requirements, a ban on synthetic products, and the issuer's right to object.
In a statement titled "Slumber Number," SEC Commissioner Hester Peirce used the metaphor of Procrustes' bed to emphasize that regulations should be tailored to reflect market realities.
She also pointed out that the order itself is unrelated to decentralized finance, writing: "Investors can engage in peer-to-peer transactions using permissionless smart contracts without needing an exemption"—suggesting that a truly and purely decentralized system might not even trigger the core regulatory framework of securities law. She further noted that if a business model already falls within the scope of the existing Securities Exchange Act, it may not require an exemption at all.
The crypto industry as a whole welcomes it, but remains focused on the details.
Uniswap founder Hayden Adams stated on X that, for AMMs, the most significant development of the day was Commissioner Peirce's concurring opinion. In his view, the exemption applies to permissioned liquidity pools on Uniswap v4, providing a U.S.-based pathway for assets and users requiring compliant access; he added that Uniswap will submit a comment letter and propose improvements.
Coinbase Vice Chairman and former SEC official Ryan VanGrack said, "As expected, clear rules are on the way. Today's clarity comes from Atkins, not Congress." According to Reuters, several companies, including Coinbase, have stated that they plan to launch tokenized stocks in the United States as soon as regulations permit.
The impact on traditional securities firms and stock exchanges remains uncertain.
According to Morgan Stanley's research, the exemption framework is broadly favorable for crypto-native platforms, though specific uncertainties remain. Robinhood's existing overseas stock‑token products provide economic exposure rather than full shareholder rights, creating a structural mismatch with SEC requirements; Morgan Stanley expects Robinhood to adjust its product structure to comply with U.S. regulatory standards. Meanwhile, competitive pressures on traditional stock exchanges may intensify as crypto-native platforms expand into equity‑related assets.
Unresolved issue: Variables over the five-year observation period
The exemption is valid for five years and is intended as a transitional measure rather than a permanent arrangement.
Uyeda explicitly stated that the pilot phase will be subject to observable constraints based on the number of tokens, the trading volume cap, and publicly available transaction data, and that feedback—including metrics, case studies, incident analyses, and live‑trade records—will be welcomed to provide a foundation for formulating longer‑term regulations going forward.
There are currently no clear indications regarding the future trajectory of synthetic equity tokens. A SEC spokesperson stated only that this response addresses the need to issue security tokens in a compliant manner within the United States, without making any further commitments on how synthetic tokens will be treated.
The issuer‑vetting mechanism could delay the listing of certain highly liquid securities. The companies with the strongest trading demand are also the most capable and most likely to opt for an exit. Moreover, the exemption addresses only issues of exchange and trader definitions; compliance frameworks at the brokerage, custody, and clearing levels remain to be fleshed out in subsequent regulations.
In her statement, Peirce acknowledged that the order's limited scope "may seem underwhelming"—after all, it is not a blanket license for the entire market, but rather a regulated gateway with defined boundaries, conditional requirements, and a five-year time limit.
Editor/Joe