CLARITY Stalls, SEC Opens a Five-Year Exemption; Hong Kong Moves $1.3T of Bills Onchain

Washington’s market-structure bill stalls on a procedural vote, so the SEC used a five-year administrative exemption to bring onchain US equity trading ashore. The same week, Hong Kong wrote the tokenization of HK$1.3 trillion in Exchange Fund Bills into its Policy Address timeline. Both paths rest on one shared judgment: regulatory competition has shifted from whether to recognize onchain assets to who wires onchain infrastructure into their own system first.

The SEC Path: Using Issuer Veto Rights to Bring Offshore Tokens Onshore

On September 17, 2026, the SEC issued an order (Press Release 2026-90) granting two forms of temporary, conditional relief under Section 36(a)(1) of the Exchange Act. First, TSVs are exempt from the definition of “exchange” in Section 3(a)(1). Second, liquidity providers in AMM liquidity pools, described in the order as “Covered Firms,” are exempt from the definition of “dealer” in Section 3(a)(5). The exemptions expire five years after publication, and the Commission has opened public comment on possible modifications.

Mechanically, a TSV brings buyers and sellers of tokenized NMS stock together by operating one or more AMM liquidity pools for permissioned participants and by setting the standards for who may access trading there. The underlying ledger is public and permissionless, but the parties allowed to trade and supply liquidity go through vetting, which is what “permissioned” means in practice. The order lists seven conditions, several of which determine who gets to stay at the table:

Rights parity. Tokenized NMS stock needs to give holders the same rights and privileges as traditional shares, including dividends and voting. Synthetic tokens that merely track price without conferring shareholder rights are expressly excluded from the relief. Issuer veto. Before listing stock tokenized by an unaffiliated third party, a TSV must give written notice to the issuer of the underlying stock and an opportunity to object. If the issuer objects, that stock cannot trade on the venue. Sanctions and eligible entity. A TSV is limited to US persons and must comply with economic and trade sanctions administered by the Treasury’s Office of Foreign Assets Control (OFAC).

The remaining conditions are equally concrete: caps on the number of symbols and trading volume; smart contracts that are auditable and public, deployed on a public permissionless distributed ledger; a halt in tokenized trading whenever the underlying stock halts on its primary listing exchange; and public disclosure of the venue’s own operations, trading activity, and the trading activity of its affiliates on the TSV. The anti-fraud and anti-manipulation provisions of the federal securities laws apply in full, with no discount.

The design points in one direction. The controversy over offshore stock tokens has centered on a single issue: many products are price-tracking instruments, investors hold no shareholder rights, and issuers were never consulted. The chief executive of cinema chain AMC publicly criticized an offshore product tied to AMC stock, saying the company had “nothing to do with” it and never endorsed it. Issuer veto plus rights parity closes the door on the practice that drew the most criticism.

For firms already offering stock tokens offshore, the choice is clear but not cheap: restructure issuance, build genuine rights mapping, and open a communication channel with issuers to win US market access; or stay outside the regulatory perimeter and give up US investors. Robinhood shares rose about 2.8% on the day of the order, a cautious-optimistic pricing of the compliance pathway. The relief also dovetails with DTCC’s tokenization service, scheduled to launch in October 2026: the exemption opens secondary trading while DTCC provides custody and settlement capacity behind it.

The Hong Kong Path: Starting at the Wholesale Layer and Fixing the Timeline

Hong Kong went a different way. The 2026 Policy Address states that the HKMA will test tokenized operations on Exchange Fund Bills before year-end, covering more than HK$1.3 trillion in outstanding issuance, so banks can use tokenization technology more efficiently and manage assets and liabilities around the clock. In other words, tokenized bills need to settle outside traditional trading hours. CMU OmniClear will establish a digital asset platform within the year for one-stop digital bond issuance and settlement, and the HKMA’s Tokenised Bond Expert Group will begin a second-phase legal review with the Financial Services and the Treasury Bureau, with members including J.P. Morgan Securities, HSBC, Standard Chartered, UBS, Ant Digital Technologies and HashKey Group.

On stablecoins, the policy direction firms up both the perimeter and the use cases: regulated stablecoins will be allowed to trade on licensed virtual asset platforms and encouraged for settling tokenized money market funds; the SFC will refine virtual asset licensing rules and tighten rules on the issuance and trading of tokenized investment products, with tokenized gold and other suitable assets under consideration. On infrastructure, the HKMA targets CBDC settlement and 24-hour operations on the EnsembleTX platform around year-end, while continuing to explore tokenized deposits. The private sector has already moved: Anchorpoint Financial, backed by Standard Chartered, HKT and Animoca Brands, has launched the Hong Kong dollar-backed HKDAP stablecoin and opened beta access to institutional distributors and professional investors in August. Standard Chartered became the first bank distributor and plans to introduce subscription and settlement services for tokenized money market funds in the fourth quarter.

On scale, Hong Kong has real traction in digital bonds: between 2025 and the first half of 2026, digital bonds issued in the city accounted for nearly 50% of the global market. In June, The Hong Kong Mortgage Corporation priced HK$12 billion of digital bonds (about US$1.5 billion), drawing roughly HK$24 billion in orders from more than 100 institutional accounts. On supervision, the SFC will begin operating a digital asset custody surveillance system in the second half of 2026, with its CrypTech program adding big-data market surveillance and AML monitoring in 2027; the HKMA has also introduced a Quantum Preparedness Index for assessing cryptographic risk at financial institutions.

Placed side by side, the two paths reveal a shared structural shift: regulators have stopped debating whether to recognize onchain assets and started competing over where onchain financial infrastructure lands. The SEC uses relief to keep secondary trading in tokenized equities inside the United States and inside entities bound by sanctions compliance. Hong Kong uses bills, bonds and stablecoin settlement to wire the wholesale funding loop into its existing Central Moneymarkets Unit. The first approach moves fast and expires quickly, and could be adjusted by a future administration; the second moves slowly, covers more ground, and anchors its timeline in a public document.

Takeaways for Practitioners