Cryptos Soar After SEC Issues Tokenization Order: Here's What's In It

Just days after cryptocurrencies tumbled on Tuesday when the CLARITY act failed to pass the Senate, crypto is surging to close out the week after the Securities and Exchange Commission issued an "Innovation Exemption" order which cleared tokenized stocks to trade onchain. The decision sent bitcoin above $81K, but it was the tokenization-focused assets like Solana, Ether and the NEAR protocol as well DeFis, that really soared.

Understandably, the tokens that ran hardest are the ones tied to trading securities onchain: Bitcoin last changed hands at $81,100, up 6% over 24 hours and 2.3% over seven days. Ether was at $2,683, up 6% on the day while Solana, long a tokenization favorite, surged more than 12% above $113. Additionally, NEAR Protocol rose 32%, Starknet 27%, Arbitrum 26% and Uniswap 20%. Among the 15 biggest tokens, Hyperliquid added 12% to $92.20, Solana 9.6% to $110, Dogecoin 7.7% to $0.088, XRP 7.6% to $1.40, Monero 6.1% to $540 and BNB 4.7% to $759. Cardano gained 9.3% and Chainlink 8%.

In response to the gross incompetence and bias of Congressional Democrats, the SEC took matters into its own hands and issued an order, Release No. 34-106402, which exempts a category it calls a Tokenized Securities Venue from the exchange definition in Section 3(a)(1) of the Securities Exchange Act. A venue may list 75 Tier 1 symbols and trade up to 0.25% of each stock's prior-month average daily volume, and tokenized shares must carry the same dividend rights, voting rights and claim on residual assets as the underlying stock.

SEC Chairman Paul Atkins said in a statement accompanying it that the Commission is "taking a significant step forward, within its statutory authority, to bring America's capital markets into the digital age," and that "this interim measure must be followed by durable rulemaking to ensure that onchain markets remain a viable pathway."

Andrew Yang, an analyst at Kaiko, put tokenized equity volume on Uniswap at about $800 million a day in commentary sent to reporters on Friday morning. "The SEC's condition is rights parity with the underlying stock, and it's not obvious how much of that volume would clear it," he said.

In any case, now that the market has finally responded to the SEC order - and curiously it took almost a full day for the price to move - here is an in-depth look inside the SEC exemption order permitting trading of tokenized equities, courtesy of Goldman analyst James Yaro (full note available to pro subs).

Overviewing the SEC innovation exemption order permitting trading of tokenized equities

On 9/17, the SEC issued an order granting a 5-year conditional exemption from registration for certain exchanges and liquidity providers (collectively termed tokenized securities venues [TSVs]), so that they can offer equities on the blockchain (tokenized equities) in the US.

We believe that this order broadly permits US tokenized equities for the first time, which could lead to the growth of the tokenized US equity market over time. In particular, we expect brokerage innovators and crypto companies to potentially build in this space, given existing tokenized equity products, including tokenized equities outside of the US.

However, there are a number of considerations that could limit broad US tokenized equities adoption, and/or the speed of growth, including:

1. the need to build new order book tech, given only venues that use an automated market maker (AMM) order book are permitted to avail themselves of the exemption - traditional exchanges and most centralized crypto venues currently use central limit order books (CLOBs), rather than AMMs;
2. the need to build new tokenized equities products, given only tokenized equities that have certain native tokenization characteristics (these include shareholder rights and dividends that are comparable to those offered on the underlying equity) are exempt, whereas non-native, derivative-like tokenized equities that certain brokers offer outside of the US (e.g., HOOD) are not permitted; and
3. the order appears to permit issuers to refuse tokenization of their equity - if issuers broadly choose to do so, this could limit the TAM for the product. The requirement that only AMMs may avail themselves of the exemption appears to be specifically targeted at enabling innovation among smaller, more nascent execution venues in the decentralized finance (DeFi) space, given AMMs function better at smaller scale, whereas CLOBs are more effective for deeper, more liquid markets.

Specifically, the order offers Exchange Act registration relief for TSVs that have AMMs (from exchange registration) and their liquidity providers (from dealer registration). Registration relief is subject to certain conditions, including:

1. tokenized equities traded on a TSV are subject to limits on the number of symbols and volume traded;
2. a TSV must verify that the tokenized equity offers certain native tokenization characteristics, specifically the same rights and privileges as the equivalent traditional stock; and
3. before beginning trading, the TSV must provide written notice and an opportunity to object to the issuer of the stock.

This order represents a further step to clarifying regulation around the use of blockchain technology in US financial services, alongside:

1. the previous Regulation Crypto Asset proposal from August, 2026 (report here), which proposed exemptions around token issuance for smaller projects; and
2. the CFTC’s no-action position (also from 9/17) to providers of passive software (see here), which exempted developers of self-custody wallets from registration as introducing brokers.

Further regulatory reforms could follow, as both the SEC and CFTC have indicated appetite to set out comprehensive digital asset regulation. However, Goldman believes that these regulatory efforts are insufficient to fully unlock broader adoption for digital assets. This would require broader legislative reform, e.g., the CLARITY Act, which failed a Senate cloture vote on 9/15. The SEC order thus has limited direct implications for the traditional exchanges and is a better outcome from a competitive perspective than if broader tokenization legislation passed and lead to wider spread adoption (ex. CLARITY Act).

Further detail below:

Scope of exemptions: The order grants conditional 5-year exemptions from registration for TSVs, entities that facilitate tokenized equities trading, provided that they use AMMs, rather than CLOBs. We note that AMMs are primarily used by decentralized exchanges, whereas CLOBs are typically used by traditional exchanges and many centralized crypto exchanges under our coverage. Further, the exemption applies only to equity tokens with certain native tokenization features, and does not provide exemption to non-native tokenized equities that have derivative-like characteristics. The order permits issuers to disallow tokenization of their own securities by objecting before trading begins. Other conditions for exemption include:

• TSVs are subject to limits on the number of tickers and volumes traded on the venue;
• TSVs would need to offer comparable shareholder rights and dividends for tokenized stock holders as those offered to underlying stock holders;
• Smart contracts of the AMMs need to be auditable, public and deployed on a public blockchain; and
• TSVs are required to provide public notice about operations and trading.
• Before beginning trading, the TSV must provide written notice and an opportunity to object to the issuer of the stock.

Impact of only excluding AMM order books: AMMs support liquidity to longer-tail contracts with its token inventory, and are thus designed for newer markets. However, as trade sizes increase, risk of price slippage increase, vs. CLOBs, due to the AMM smart contracts’ scarcity-dependent pricing. This hinders liquidity as markets expand, and means CLOBs are typically better for deeper markets. We believe that this could limit the exemption’s effect on larger markets.

Native vs. non-native tokenization: The order only applies to tokenized equities with certain natively tokenized features, specifically shareholder rights, and dividends, which are comparable to those offered to holders of the underlying stock. Native tokenization refers to assets in which the blockchain serves as the primary, legally binding ledger for the tokenized asset, and the assets are issued directly on the blockchain by the issuer or its agent. On the other hand, non-native tokenized equities, which appear to be out of the scope of the order, creates an on-chain wrapper of an off-chain asset, and the resulting product approximates a derivative or swap. Key differences include: 1) native tokens represent direct on-chain asset ownership vs. non-native tokens that merely represent a claim on the underlying; 2) natively tokenized assets typically have most or all of the rights associated with the underlying, namely voting and dividends, while most non-native do not; and 3) native assets are governed primarily by the underlying issuer’s regulator, vs. non-native assets, which have dual oversight at the token and the underlying level.

Current regulatory and legislative progress: This exemption follows the SEC’s previous Regulation Crypto Assets that provided issuer-related exemptions (see our report here). In addition, the CFTC issued a no-action position on 9/17 to providers of passive software (see here), which exempted developers of permissionless digital asset protocols, e.g., self-custody crypto wallets, from registration as introducing brokers. In our view, incremental regulatory reforms could follow, as both the SEC and CFTC chairs have indicated a focus on creating comprehensive digital asset regulation, irrespective of the status of digital assets legislation. However, we believe that these regulatory efforts, are likely not fully sufficient to unlock the potential for broader adoption for digital assets. In our view, regulatory action lacks the permanence of legislation, as it could be reversed or amended by future regulators through rulemaking. In our view, a full unlock of digital assets would require comprehensive legislative reform, e.g., the CLARITY Act, which failed a Senate cloture vote on 9/15.

Implications across Goldman coverage:

• Brokers & crypto: We expect certain names in our coverage could look to build tokenized equity markets in the US,specifically Buy-rated COIN and HOOD. COIN could benefit most, given that its tokenized equities brokerage product already offers certain shareholder rights and dividends that appear to align with criteria required to use this exemption. Further, COIN offers a number of infrastructure offerings that should allow it to benefit if other firms build tokenized equities offerings using the exemption, specifically COIN’s custody offering, and Coinbase Tokenize, its institutional tokenization platform. However, if COIN were to use the exemption to build a tokenized equities exchange, this would likely require tech development, given COIN’s exchanges use CLOBs. As such, it would need to build AMM infrastructure to offer tokenized equity trading. That being said, COIN routes brokered trades to decentralized exchanges, many of which use AMMs and thus could use the exemption. HOOD could also be a beneficiary, although HOOD’s current tokenized equity product (only available in Europe) is non-natively tokenized, which would not be permitted under this order. HOOD would therefore need to build tokenized equity product to meet the criteria of the exemption. Finally, given tokenized equities are on-chain, this could drive greater use of tokenized cash as a settlement currency. This could benefit Neutral-rated CRCL as the issuer of the largest US-regulated stablecoin, USDC. COIN also receives meaningful economics from most existing USDC, and could thus benefit as well.
  
• Traditional exchanges: We believe the order has limited direct implications or competitive risks for the traditional exchanges in our coverage, given that NDAQ and NYSE (ICE) already operate registered national securities exchanges and therefore do not require relief from the definition of “exchange” in order to trade tokenized equities. Notably, both are pursuing tokenization within the existing market infrastructure frameworks rather than TSVs. As a result, we do not believe either would need to build AMM infrastructure to support their current tokenization initiatives. That being said, the AMM condition would become relevant if an exchange sought to operate a TSV, whether directly or through an affiliate/partner. Further, we note that none of the exchanges in our coverage have announced an intention to do so though ICE noted it has the ability to do through its partner OKX. Further, proliferation of new TSV venues could result in increased liquidity bifurcation, limiting potential benefits from new technology to market participants. Overall, given volume caps and corporate issuers’ ability to opt out of TSV operators issuing tokenized equities, we see minimal impact to volumes at traditional exchanges.
  
  • Current initiatives and their fit within the order: NDAQ received SEC approval in March 2026 for a pilot that permits tokenized versions of DTC-eligible securities to trade on the same order book, with DTC handling tokenization and settlement once a buyer flags at order entry that it wants delivery in token form. This largely covers Russell 1000 constituents and index ETFs and applies for the duration of the pilot (3 years). In DTCC’s production test in July 2026, NDAQ was the venue where trades were executed before DTCC converted them into tokens, with QQQ among the key securities used. DTCC’s tokenization service is due to launch in October 2026. On the other hand, NYSE (ICE) has followed a similar path and fits within the current DTC pilot framework and with the same eligible universe (Russell 1000). In addition, NYSE is developing a separate platform that would support 24/7 trading, instant settlement, and stablecoin-based funding by combining its Pillar matching engine with blockchain-based post-trade systems, although that venue remains subject to regulatory approval.
    
  • How competitive dynamics could evolve: We believe the incumbent traditional exchanges would retain a structural advantage in the most liquid names, given that tokenized orders on NDAQ and NYSE interact with the same order book as traditional shares, whereas tokenized equities on a TSV are subject to limits on the number of symbols and volumes traded, and access is restricted to permissioned participants. This is enforced by the point that the eligible universe under the DTC pilot consists of Russell 1000 constituents and major index ETFs, which are precisely the deeper markets where CLOBs are typically more effective than AMMs.
    
  • That said, we see trading hours as the more likely area of competition, given that NDAQ expects to begin round-the-clock trading (23/5) starting 12/6, which leaves weekends uncovered and NYSE’s 24/7 venue still requires approval. However, we note that demand for overnight trading remains modest today, as overnight ATS volumes represented ~0.7% of total ADV in 1H26 and were concentrated in sub-dollar stocks and leveraged/inverse ETFs (per our estimate). Lastly, we note that both paths are time-limited — exemptions granted to TSVs expire 5 years while traditional exchanges’ tokenized trading rules apply only during the DTC’s 3 year pilot program.

Much more in the full Goldman note available to pro subs.