- High-ranking members of the US Securities and Exchange Commission (SEC) expect Tokenized Securities Venues (TSVs) to begin submitting their operating frameworks under the Innovation Exemption by the last quarter of 2026.
- The agency also clarified that it does not consider the participants to be operating as “true DeFi” (decentralized finance) platforms.
In an interview with Crypto in America, Taylor Lindman, chief counsel of the SEC Crypto Task Force, and Hester Peirce, Commissioner and head of the Crypto Task Force, jointly discussed how the Innovation Exemption provides temporary relief for firms that facilitate trading of tokenized stock onchain through automated market makers (AMMs). They highlighted that the five-year window for qualifying participants offers them an opportunity to observe and experiment with how they can use and trade tokenized securities across different onchain scenarios.
Likewise, the Innovation Exemption lets participants study how tokenized assets interact with one another and the broader market in real-world settings. They can do these without triggering the agency’s burdensome requirements.
Paul Atkins, Chair of the SEC, stated that the measure is a vital part of the current administration’s goal of modernizing America’s capital markets for the digital age and supporting innovation.
Submission of Applications for Tokenized Securities Venues
Along the way, Lindman projected that some TSVs could begin submitting their operational framework under the Innovation Exemption as early as the fourth quarter. The notices would indicate which firms will enter the new market.
“In terms of timing, I think there will be a bit of a lag time between when it came out and when we’ll see the first firms filing their notices,” said Lindman. “The notice will be making the agency aware and making the public aware that they intend to operate as what are called these tokenized securities venues, the TSVs, and I think that will probably be at some point in the next quarter.”
Not True DeFi Platforms
Meanwhile, Peirce, who the community endearingly calls “Crypto Mom,” explained that TSVs don’t operate as “true DeFi” platforms. Together with her colleague, she pointed out that the model is “more onchain finance” because it clearly defines the person or entity running it, which translates to accountability and clear oversight structures. Additionally, the distinction makes it easier to assess compliance with the exemptions’ provisions.
Lindman claimed that some firms are already planning to avail the perks of the innovation exemption as they leverage blockchain technology for 24/7 equities trading, deeper liquidity, and capital efficiency.
