Permission to Innovate: SEC Carves Out Path for On-Chain Stock Trading // Cooley // Global Law Firm
Temporary relief creates a notice-based pathway for qualifying tokenized securities venues and certain AMM liquidity providers while the SEC considers permanent rules On September 17, 2026, the Securities and Exchange Commission (SEC) issued the long-awaited “Innovation Exemption,” an order under Section 36(a)(1) of the Securities Exchange Act of 1934 granting two forms of temporary, conditional relief. The first exempts qualifying tokenized securities venues (TSVs) from the definition of “exchange,” while the second exempts qualifying liquidity providers, termed “Covered Firms,” from the definition of “dealer” with respect to specified activity in a TSV’s automated market maker (AMM) liquidity pool. The relief expires five years after its publication, subject to earlier modification by the SEC, and the SEC has solicited comment on whether and how to revise, extend or make it permanent.[1] The Innovation Exemption arrives at a pivotal moment. Just two days before the order was issued,