Orca’s legal chief says SEC exemption lets DeFi test its efficiency claims

DeFi has spent years claiming it can move markets faster and cheaper than Wall Street. Now it gets a chance to prove it under regulatory supervision.

Speaking at Korea Blockchain Week 2026, Orca Chief Legal Officer Christopher Montagano said the SEC’s new innovation exemption allows decentralized finance to test whether blockchain rails are actually more efficient than traditional ones.

What the SEC exemption actually allows

The SEC issued its Innovation Exemption on September 17, 2026. It grants five years of conditional relief, running until September 17, 2031.

Under the framework, Tokenized Securities Venues (TSVs) and certain liquidity providers can run permissioned trading of tokenized US-listed National Market System (NMS) stocks.

The exemption was built with automated market makers (AMMs) and liquidity pools on public blockchains in mind. On a traditional exchange, buyers and sellers are matched through an order book, with registered dealers and exchanges standing in the middle. An AMM swaps that structure for a pool of assets and a pricing formula, so trades execute against the pool rather than against a specific counterparty. The exemption lets these pools operate without the parties involved registering as exchanges or dealers in the traditional sense.

The fine print keeps it from being a free-for-all

The exemption explicitly states that it is not a ruling on decentralized finance. It also requires compliance controls, including adherence to sanctions rules and issuer consent. Put simply, the company whose stock is being tokenized has to sign off, and the venue has to screen who is trading.

Those conditions draw a clear line between this framework and fully permissionless DeFi, where anyone with a wallet can trade anything.

Montagano said the innovation exemption allows DeFi to test if blockchain rails are more efficient than traditional ones.

Orca’s long road to this moment

Orca has been involved in discussions with the SEC around these frameworks since at least 2025. Much of that work has run through Project Open, an effort aimed at compliant on-chain trading of listed equities.

Orca has also had a head start in practice. Tokenized stocks have been trading on the platform since November 2025, including Forward Industries common stock.

Korea Blockchain Week 2026, which wrapped on October 1, 2026, featured tracks focused on regulation and on-chain finance.

What this means for DeFi and traditional markets

The five-year window runs until September 17, 2031, giving builders, liquidity providers and regulators time to gather real data on whether on-chain trading of listed stocks delivers on its promises.

For DeFi protocols, the exemption rewards projects willing to build permissioned layers, issuer relationships and sanctions screening. Protocols committed to fully open access may find themselves outside the framework entirely.

Market reaction to Montagano’s remarks has so far been muted. The bigger signal will come from adoption: how many TSVs launch, how much liquidity flows into tokenized stock pools, and how many issuers agree to have their shares traded on-chain.

Because the exemption is conditional and time-limited, its eventual outcome could shape whether a permanent framework follows, or whether the experiment quietly expires in 2031.