The U.S. SEC releases tokenized "innovation exemption": the gateway for on-chain stock trading opens, but the DeFi celebration is still premature

Author: Gu Yu, ChainCatcher

On September 17, SEC Chairman Paul Atkins wrote in a statement: "Today, the U.S. Securities and Exchange Commission is taking an important step to bring the U.S. capital markets into the digital age." On the same day, the SEC officially issued the "Innovation Exemption" order, opening a five-year compliance channel for tokenized U.S. stocks to be traded on-chain.

According to this exemption order, the U.S. will allow compliant Tokenized Securities Venues (TSV) to conduct on-chain trading of tokenized NMS U.S. stocks in licensed AMM liquidity pools; platforms and liquidity-providing market makers will receive temporary exemptions from being classified as "exchanges" and "dealers" under the Securities Exchange Act of 1934.

Once the news broke, the entire RWA and tokenization sector was instantly abuzz. The secondary market reacted quickly: Securitize saw a nearly 15% increase in a single day, Bullish rose over 6%, and Coinbase and Robinhood also saw gains; Uniswap's governance token UNI experienced a 24-hour increase that nearly approached 18%. The market generally views this policy as a historic loosening by U.S. regulators regarding on-chain securities trading.

After the CLARITY Act was stalled in the Senate and Congress pushed cryptocurrency legislation into a deadlock, this is the SEC's unilateral advancement of the "digital agenda" through administrative exemptions, driven by Chairman Atkins, Commissioner Mark Uyeda, and Crypto Task Force member Hester Peirce. For the cryptocurrency industry, it is both a long-awaited green light and a clear red line—where that red line is drawn will determine who can remain at the table for on-chain securities in the coming years.

1. Event Overview: Five-Year Window, TSV, and a "Red Line"

The core of the "Innovation Exemption" is to provide temporary conditional exemptions for a type of platform known as "Tokenized Securities Venues" (TSV). Specifically, TSVs can avoid being classified as "exchanges" under the Securities Exchange Act of 1934 when using innovative permissioned automated market makers (AMM) and liquidity pool trading of tokenized NMS stocks; at the same time, liquidity providers offering tokenized NMS stocks to AMM liquidity pools with their own capital can also be exempt from the definition of "dealers."

The entire exemption has a time limit: five years from the date of announcement. The committee clearly positions it as a "controlled experiment"—to observe how emerging venues operate, accumulate data for future legislation, and retain the power to tighten regulations at any time. In Uyeda's words, the SEC's use of exemption powers to promote innovation "is a well-trodden path": products that are now commonplace, such as money market funds, index funds, and ETFs, all grew from the committee's earlier use of exemption powers.

Mechanically, TSVs must meet a complete set of conditions. The types of trades and transaction volumes are constrained by the number of symbols corresponding to "price limits" and trading volume caps; tokenized stocks must provide holders with the same economic and governance rights as traditional NMS stocks (including dividends and voting rights); the smart contracts used by TSVs must be auditable, public, and deployed on a public, permissionless distributed ledger; once the underlying stocks are suspended on the main board, on-chain trading must also stop; platforms must publicly disclose operational and trading activity information and regularly report dollar-denominated transaction prices, volumes, times, pool addresses, and end-of-day sizes to reduce information asymmetry and support regulatory monitoring.

Most intriguingly are the two "red lines." The first is the issuer's veto right: when a TSV wants to list a third-party tokenized stock that it does not control, it must notify the issuer in writing and wait 30 days; if the issuer raises objections, that token cannot use the exemption. The second is the exclusion of synthetic tokens: "synthetic products" that only track stock prices and do not carry actual shareholder rights are not included in the framework.

These two red lines did not come out of nowhere. This summer, AMC Entertainment CEO Adam Aron publicly criticized Robinhood for listing AMC-related stock tokens without the company's involvement, while Robinhood CEO Vlad Tenev argued that publicly traded companies do not control third-party products that reference their stocks. The direct annotation of this dispute is the "issuer veto right" now written into the exemption order—it returns the initiative of tokenization back to the listed companies themselves.

Why now? The background chain is clear. In March of this year, the SEC approved Nasdaq's tokenized stock rules; in April, similar rules passed at the New York Stock Exchange; and the custody and clearing giant DTCC also launched a pilot for tokenized assets, planning to conduct limited production trading in July and broader launches in October. This week, the CLARITY Act, aimed at providing a comprehensive legal framework for the cryptocurrency market, stalled in the Senate procedural vote due to not reaching the 60-vote threshold. As legislative channels narrow, administrative exemptions have become a tool for Atkins to advance the agenda—previously in August, the SEC proposed allowing certain cryptocurrency companies to be exempt from securities issuance rules, seen as a different move within the same strategy.

In terms of utility, this exemption points to a change in market structure: stocks can be traded 24/7, nearly instant settlement, supporting fragmented holdings and user self-custody, weakening the time periods and clearing barriers that traditional brokerages rely on for survival. As Atkins stated, this is the first step in bringing the U.S. capital markets "into the digital age"; the total market for tokenized stocks has expanded from just a few million dollars by the end of 2024 to now over $6.4 billion (according to CoinMarketCap data), with nearly all growth occurring at the retail end.

2. Industry Perspectives: Cheers and Caution Coexist

After the framework was established, the industry's response quickly split along the line of "who gets the compliance ticket for on-chain securities": builders of the new order see it as a recognition, while guardians of the established rules are wary of the channel being circumvented.

The cheerleaders almost encompass all promoters of "real stock" tokenization. Carlos Domingo, CEO of digital asset and RWA tokenization platform Securitize, stated that this is "an extremely positive step because it provides a path for trading real tokenized stocks," and called the framework "strengthening the logic of issuer-led tokenization, which will accelerate the adoption of native tokenized securities." Gabo Otte, CEO of custody tokenization platform Dinari, pointed out the regulatory intent: "The SEC is drawing important boundaries around what tokenized equity should represent—putting stocks on-chain should not mean stripping away the rights that make them stocks."

Joris Delanoue, co-founder of compliance on-chain transfer agent Fairmint, believes "the issuer veto right is a key safeguard"; Ladan Stewart, global head of fintech at White & Case, referred to the exemption as a "major victory" for the cryptocurrency industry, believing it allows cryptocurrency companies to play roles in trading execution and clearing without bearing all the rules of registered intermediaries. Zach Pandl from Grayscale expects the exemption to bring "more practical value to tokenized assets," while Robert Leshner, founder of Superstate, predicts that issuers will "redesign products to comply with these rules" in the coming months.

The DeFi camp also received unexpected joy. Hayden Adams, founder of Uniswap, retweeted and supported Commissioner Peirce's viewpoint—truly decentralized systems driven by autonomous software do not need exemptions, which corresponds to the conventional permissionless Uniswap; the exemption actually applies to permissioned liquidity pools on Uniswap v4, providing a compliant path for related assets and users to trade in the U.S., and Uniswap will submit a letter of opinion to propose improvements.

Peirce herself clearly delineated the boundaries through the crypto task force: this "is not about DeFi," TSV is just one model of on-chain securities trading, and the committee is open to other models—implying that truly decentralized systems do not need this pass.

The cautionary voices mainly come from traditional Wall Street and rule guardians. Market maker Citadel Securities and industry organization SIFMA publicly opposed advancing such structural changes through "special arrangements," advocating for a formal rule amendment process; Citadel had previously warned that tokenization could "siphon" liquidity from the public market. Even within the cryptocurrency space, Thomas Cowan, global head of Bullish's tokenization business, expressed "non-comprehensive openness," and Peirce's "only one model" also jointly hinted: this door is opened limitedly and watched closely. Whether it becomes formalized or retracted after five years depends on the data produced by this experiment, not on the industry's optimistic expectations.

3. Which Projects Are Most Affected?

The benefits brought by the Innovation Exemption are not evenly distributed. Different projects in various sectors range from direct beneficiaries, indirectly favorable, to those hardly affected, and even those whose business models are impacted, showing significant differentiation.

First Tier: Directly Benefiting, Obtaining U.S. Compliance Entry Ticket

1. Uniswap v4 and AMM protocols supporting permissioned pools. This is the sector with the most intense market reaction. This exemption explicitly lists permissioned AMM liquidity pools as legitimate trading vehicles. The modular architecture of Uniswap v4 natively supports permissioned whitelisted pools, allowing institutions to build isolated, controllable liquidity pools that meet all conditions for TSV access, auditing, and data reporting, directly adapting to exemption rules. However, it must be clarified that the beneficiaries are institutional permissioned pools, not ordinary permissionless DEXs—native public pools remain outside the protection of the exemption. Other DEXs like Aerodrome and Raydium will also need to develop permissioned isolation pool modules to participate in TSV business, as existing product versions cannot directly apply the policy benefits.

2. Tokenized securities service providers like Securitize and Bullish. Securitize, as a leading digital securities service provider, saw its stock price surge first. These companies inherently possess mature capabilities for securities token issuance, custody, and compliance filing, naturally positioning them to act as TSV operators: connecting with listed companies to complete stock tokenization issuance, building TSV trading venues, connecting with market-making institutions to provide liquidity, and running the entire process of KYC access, data reporting, and issuer communication. Bullish had previously acquired the securities transfer service provider Equiniti, completing the traditional securities registration and clearing infrastructure, and also possesses the complete conditions to transform into a TSV.

3. Institutional custody, auditing, and on-chain data service providers. TSV rules mandate that smart contracts be auditable, trading data be public, and participants must undergo identity verification. Contract security auditing firms, compliance custody institutions, and on-chain trading data analysis platforms will see a new wave of B-end demand. The implementation of TSV business will drive the growth of demand for the entire tokenized compliance infrastructure sector.

Second Tier: Indirectly Favorable, Obtaining U.S. Path but Needing Transformation

Cryptocurrency exchanges Coinbase, Robinhood, Kraken, and Gemini have long offered tokenized stocks overseas but have never been able to serve U.S. users; the on-chain perpetual contract leader Hyperliquid is also communicating with regulators about localization paths. The exemption order has shown them the possibility of bringing products back to the U.S. market, and Coinbase and Robinhood both saw their stock prices rise on the same day. However, as mentioned earlier, most of their existing offshore synthetic stock products do not meet the stringent requirements of "real underlying equity." To benefit from U.S. dividends, they must first complete product structural transformations. The underlying public chains Ethereum, Solana, and BNB Chain can serve as the settlement network for TSV due to their compliance positioning as "public, permissionless distributed ledgers," indirectly benefiting from the spillover of compliant trading volume.

Third Tier: Synthetic Tokens and Traditional Brokers Under Pressure

Where there are beneficiaries, there are also parties directly excluded by the red line of "real stocks vs. synthetic tokens." The first to feel the chill are those purely synthetic tokenized products that only provide exposure to stock prices without carrying shareholder rights—platforms represented by Ondo, whose offshore stock products are not within the framework. If they do not supplement equity and compliance, they are almost blocked from the table, rather than "entering after transformation." This stands in stark contrast to the second tier of exchanges: the latter at least holds traffic and transformation chips, while the former lacks ready distribution and compliance foundations, suffering far greater impacts.

On the other end, traditional brokers like Charles Schwab and Morgan Stanley's E*Trade, which have long profited from clearing and time spread, are under pressure due to direct competition from crypto-native platforms, with their stock prices dropping approximately 1.4% and 0.5% respectively on the same day.

IV. Conclusion

For the past few years, the cryptocurrency industry has had a grand narrative: blockchain tokenization will disrupt traditional capital markets, moving stocks and bonds onto the chain to achieve 24/7 global trading and instant clearing and settlement. The SEC's innovation exemption has, for the first time, pushed this narrative from fantasy to a real pilot phase in the U.S.

A five-year window is neither long nor short. It is a controlled experiment, not a full opening; it is a regulatory breakthrough as well as a precise selection. The SEC has used a red line between "real stocks" and "synthetic tokens" to keep products that only have stock price exposure but lack shareholder rights out of the door, while also returning the veto power to the listed companies themselves.

For the cryptocurrency industry, this is undoubtedly a day worth recording—the first step of on-chain stocks moving from the gray area to the compliance table has already been taken. But who can truly navigate these five years depends on one thing: whether "real stocks" can be moved onto the chain in a compliant manner without sacrificing compliance.