[SEC Commissioner Peirce: Innovation Exemption Tailored for On-Chain Stock Trading, Clearly Distinguishing from DeFi] BlockBeats News, September 17, U.S. Securities and Exchange Commission (SEC) Commissioner Hester M. Peirce issued a statement regarding the Commission's approval of an 'innovation exemption.' This exemption is a temporary, conditional arrangement that allows 'Tokenized Securities Venues' (TSVs) to trade NMS (National Market System) stocks on-chain. TSVs provide automated market maker liquidity pools and set participant access standards, while being exempt from the definition of 'exchange' under the Securities Exchange Act. Specific liquidity providers for TSVs are also exempt from the definition of 'dealer.' Issuers who do not wish for their stocks to be traded on TSVs can opt out. The exemption is available to U.S.-based entities, and both existing institutions and new entrants can participate. Peirce emphasized that the Commission does not pre-determine that parties relying on this exemption must necessarily qualify as 'exchanges' or 'dealers,' but rather aims to observe who uses it and how it is used before making regulatory judgments. Peirce clearly delineated the boundaries of this order: this is not about decentralized finance (DeFi). Systems driven by automated software and truly decentralized do not raise the fundamental securities regulatory concerns, such as the risk of intermediaries trusted by investors being incompetent, careless, or compromised. Investors engaging in peer-to-peer transactions using permissionless smart contracts do not require exemptions at all. TSVs are merely one model for on-chain securities trading, and the Commission remains open to other models. On-chain trading models that can comply with existing Securities Exchange Act requirements may not need exemptions at all. [Original Link]