At Korea Blockchain Week 2026, Orca Chief Legal Officer Christopher Montagano discussed the SEC's new innovation exemption. This regulatory framework allows decentralized finance protocols to test whether blockchain-based trading systems can outperform traditional finance in terms of efficiency.
The SEC issued the innovation exemption on September 17, 2026, providing five years of conditional relief that expires on September 17, 2031. The framework enables Tokenized Securities Venues and liquidity providers to conduct permissioned trading of tokenized US-listed National Market System stocks.
The exemption is designed for automated market makers and liquidity pools on public blockchains. It allows these entities to operate without registering as traditional exchanges or dealers, provided they implement compliance controls such as sanctions screening and obtain issuer consent.
Orca has been discussing these frameworks with the SEC since 2025 through Project Open. The platform has been trading tokenized stocks, including Forward Industries common stock, since November 2025. The success of this experiment may determine if a permanent framework is established.
