SEC Grants Tokenized Stock Trading Exemption
The SEC issued a five-year exemption for tokenized stock trading on September 17, 2026. This move follows the Senate's failed cloture vote on the Clarity Act.
The Securities and Exchange Commission granted a temporary exemption to facilitate trading of tokenized national market system stocks. The order was issued on September 17, 2026. It allows permissioned trading on blockchain-based venues. The exemption lasts for five years.
This regulatory move occurred after the Senate failed to advance the Digital Asset Market Clarity Act. The cloture vote ended with a score of 49 to 50. One senator did not vote. At least 60 votes were required for the motion to pass.
Tokenized Stock Trading Rules
The SEC created two new exemptions in the order. The first is the TSV Exemption for Tokenized Securities Venues. This exempts qualifying venues from the definition of an exchange. The second is the Covered Firm Exemption for liquidity providers.
Liquidity providers are exempt from dealer registration requirements. They can supply tokenized stocks to automated market maker pools. TSVs must operate on public permissionless distributed ledgers. They must implement anti-money laundering and know-your-customer controls.
Venues must publish detailed public notices and maintain books and records. Trading in tokenized stocks must halt if the underlying stock is halted. Tokenized stocks can pair with payment stablecoins. They can also pair with tokenized money market funds.
CFTC Relief for Software Providers
The Commodity Futures Trading Commission issued a no-action letter on the same day. It extends no-action relief to all passive software providers. These providers develop front-end interface software. They enable users to trade CFTC-regulated derivatives.
The relief covers self-custodial crypto wallet applications. The CFTC will not recommend enforcement action against qualifying providers. This applies to failure to register as introducing brokers. Providers must satisfy ten enumerated conditions.
Senate Clarity Act Vote
Senate Republicans released the proposed final substitute text of the Clarity Act. This happened the day before the procedural vote. The text includes compromises on ethics enforcement. It protects software developers from registration requirements.
The draft restricts digital asset service providers. They cannot pay U.S. customers interest solely for holding stablecoins. Lowenstein Sandler highlights these developments in its weekly digest. The firm advises digital asset and cryptocurrency projects.
