SEC Grants Five-Year Tokenized-Stock Relief as CLARITY Act Fails to Advance

The U.S. Securities and Exchange Commission (SEC) has issued a five-year conditional exemption allowing Tokenized Securities Venues (TSVs) to trade permissioned tokenized National Market System (NMS) stocks. This regulatory order provides a limited federal pathway for automated market makers and liquidity pools to operate without being classified as traditional exchanges or dealers under the Securities Exchange Act. The exemption is structured into two tiers, with Tier 1 permitting 75 symbols at 0.25% of average daily volume and Tier 2 allowing 250 symbols at 2.5% of volume. To qualify, venues must ensure token holders possess identical rights to traditional shareholders and maintain public, auditable smart contracts on permissionless ledgers. Trading must also synchronize with primary exchange halts to ensure market integrity. This development follows the failure of the CLARITY Act (H.R. 3633) to advance in the Senate, where a cloture motion was defeated 49-50 on September 15. By providing this temporary relief, the SEC establishes a narrow, controlled framework for tokenized equity trading in the absence of broader legislative progress. This move represents a significant, albeit restricted, step toward integrating traditional stock market infrastructure with blockchain-based trading venues.