On September 17, the SEC issued an order launching a five-year Innovation Exemption: select platforms will have a temporary opportunity to trade on-chain tokenized NMS stocks through permissioned AMM liquidity pools without registering as an exchange.

Trading via Permissioned AMM and Equal Rights for Holders

To qualify under this regime, the token must provide holders with the same "rights and privileges" as the underlying shares, including dividends and voting. Platforms are required to admit users and pools on a permissioned basis. Tokenization can be conducted by a third party, but the issuer of the underlying stock has the right to block issuance before trading begins. The regulator has effectively opened a narrow corridor for on-chain trading, where the quality of the token is as important as the choice of platform.

Synthetic Tokens Not Eligible; Robinhood and Kraken Affected

Tokens that mimic the price of a stock without conveying shareholder rights are classified as "synthetic" and do not meet the requirements. As currently structured, Robinhood's Stock Tokens and Kraken's xStocks fall under this restriction.

Coinbase and Ondo Closer to SEC Model

On September 14, Coinbase CEO Brian Armstrong stated that their tokenized stocks are not synthetic or debt instruments, but "real, fully backed securities, redeemable for underlying shares, with integrated dividends," and that voting rights "will be available soon." Currently, Coinbase's offering is not available in the US and relies on a central order book, while the SEC exemption is designed for TSVs with permissioned AMM pools; however, Coinbase has room to maneuver through the Base network. In June, Ondo launched tokenized US securities with underlying shares held in traditional custody and on-chain claim rights for token holders; the company also acquired Oasis Pro, which includes an SEC-registered broker-dealer, ATS, and transfer agent.

Market Reaction and Regulator's Position

Following the announcement of the "Innovation Exemption," BTC and ETH rose by more than 10%, and the UNI token gained over 30% in the following days. Robinhood CEO Vlad Tenev stated: "Tokenization is coming to America." Commissioner Hester Peirce emphasized that the exemption covers one specific approach, and the SEC is open to other models outside the TSV structure.