CLARITY Act Stalls in Senate, but SEC and CFTC Deliver Crypto Rules Anyway

This article is adapted from "Crypto for Advisors," CoinDesk's weekly newsletter for financial advisors, featuring commentary from Alex Tapscott, CEO of CMCC Global Capital Markets, and an "Ask an Expert" column by Leo Mindyuk, CEO of ML Tech.

The U.S. Senate declined to advance the CLARITY Act on Sept. 15, falling short in a procedural vote and pushing off — for now — a comprehensive legislated framework for digital assets. Regulatory clarity arrived anyway: within days, the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) rolled out measures of their own. In CoinDesk's "Crypto for Advisors" newsletter, Tapscott argued the regulators' move provides a short-term boost while creating a longer-term risk.

Congress Stalls, Regulators Move

On Sept. 15, the Senate had a chance to take a major step toward setting the rules of the road for digital assets and, by extension, the digital economy now taking shape. It didn't. The CLARITY Act failed to advance, meaning a comprehensive legislated framework for digital assets — including tokenized money, stocks, bonds, deeds and other assets — and for the exchanges, brokers, issu and intermediaries that deal in them would have to wait.

Tapscott argued the bill would have strengthened American leadership, benefited the American consumer, and given banks and other legacy enterprises a clear path to invest, build, compete — and perhaps even win the future of financial services.

"There is nothing so powerful as an idea whose time has come," he wrote. "For now, that time has not arrived. But as Congress closed a door, regulators opened a window."

Both the SEC and CFTC moved with remarkable speed. Just two days after CLARITY failed, the SEC issued a five-year "Innovation Exemption" allowing certain venues to trade tokenized U.S.-listed stocks onchain using automated market makers and liquidity pools — a market model in which orders trade against pooled assets rather than being matched directly with a counterparty. SEC Chairman Paul Atkins described the order as a "bridge toward durable rulemaking."

The CFTC, meanwhile, has been stripping away practical barriers, providing relief to certain software providers and updating guidance around tokenized investments and blockchain-based recordkeeping.

"Congress declined to build the bridge, so regulators like Atkins have started laying planks themselves," Tapscott wrote. The question now, he added, is whether regulatory clarity can substitute for legislative clarity — and, if so, for how long.

The Genie Is Out of the Bottle

Tapscott suggested regulators may recognize something Congress has yet to fully accommodate: adoption is already well underway. New technologies generally need three things to achieve mass adoption — technology that works, products people want, and a regulatory environment that allows companies to build. Crypto, in his view, increasingly has the first two, and regulators are now attempting to provide the third.

On the technology front, he cited Solana's capacity to handle the same transaction volume as the equity, fixed-income and foreign exchange markets combined, and platforms such as Hyperliquid, which provide real-time, 24/7/365 trading in virtually any market and are beginning to eat into traditional commodities futures markets.

Product-market fit is also evident, he argued. Stablecoins are crypto's first killer app but won't be its last. Once the world gets its hands on digital money, the next thing people will want is a way to save, earn and invest with that money. Tokenized stocks and bonds, along with convenient, easy-to-access onchain markets, will fill that role — and that is before accounting for what he called the explosive upside of agentic commerce (automated transactions initiated by AI software agents) happening with digital assets.

The missing ingredient to unleash this capability, in his telling, has been regulatory clarity. CLARITY was supposed to be the watershed: the moment crypto companies, banks and others could compete on a level playing field, knowing the rules of the road.

Can regulators fill that gap? Perhaps, at least for now. But Tapscott drew an important distinction between regulatory permission and legislative certainty: regulators can tell companies what they may do today, while legislation provides greater protection against a future administration deciding something different tomorrow. That distinction matters enormously, he noted, to a bank, exchange or asset manager committing billions of dollars to infrastructure that may take a decade to pay off.

The future, he wrote, is not something to be predicted but something to be achieved, and the key question is how much work can get done in the next two years. The window offers the industry a chance to create facts on the ground: products consumers actually use, infrastructure financial institutions depend upon, businesses that employ people and invest capital, and markets that demonstrably work better than what came before. The deeper blockchain becomes embedded in the productive economy, the harder it will be for any future government — Democratic or Republican — to justify turning back the clock.

The opportunity could still be squandered. If the crypto industry spends this window chasing the same short-term gains that defined past cycles, or continues to politicize the technology and alienate those with whom it disagrees, a historic economic opportunity could be lost. Stripe, Circle, Robinhood and other innovators are unlikely to wait. Incumbent financial institutions face a harder choice: wait for Congress to provide the certainty they would prefer, or move under the certainty regulators can currently provide. "Waiting may feel prudent," Tapscott wrote. "It may prove considerably riskier."

"CLARITY didn't happen. But clarity, of a sort, is emerging anyway," he concluded. "The window is open. The industry should push through as many useful innovations and products as it can."

Ask an Expert: What the Innovation Exemption Changes

In the newsletter's "Ask an Expert" segment, Mindyuk of ML Tech addressed the practical questions raised by the SEC's five-year "Innovation Exemption" following CLARITY's stall.

Asked what the exemption changes, Mindyuk explained that the SEC has opened a pathway for eligible tokenized U.S.-listed stocks to trade onchain through automated liquidity pools. Qualifying venues do not have to register as exchanges, and certain liquidity providers receive dealer-registration relief for covered activities. Trading is limited to identity-verified participants.

The order came two days after CLARITY's failed procedural Senate vote. Its scope is narrower than the proposed legislation, which also addresses tokenized securities; instead, it allows a specific market model to develop under existing SEC authority. It is also a deliberately limited test: trading is capped at a small fraction of each stock's normal volume, and margin is not allowed. The relief lasts five years, but the SEC can modify its terms or duration.

Advisors, Mindyuk said, should treat this as a limited market test and require evidence that a product improves access or execution at their clients' actual trade sizes.

What Does a Client Own When Buying a Tokenized Stock?

Some products marketed as "tokenized stocks" provide synthetic exposure to a stock's returns without conveying shareholder rights — payments that mirror dividends do not make the holder a shareholder. The SEC's new exemption sets a useful test, Mindyuk noted: to trade on these venues, a token has to carry the same rights as the underlying share — the same dividends, the same votes and the same claim on the company's assets in a liquidation. Synthetic exposure doesn't qualify.

If a third party tokenizes a company's stock without the company's involvement, it has to deliver proxy materials to holders. The company also gets 30 days' notice and can block trading on that venue.

Advisors should read the documents that set out the client's rights, check how dividends and votes actually reach the client, and identify whether the token represents direct ownership, an indirect interest in shares held in custody, or a contractual claim tied to the stock's returns. Most important, Mindyuk said, is finding out what the client can claim if the tokenization provider fails: is the client recorded as a shareholder with the transfer agent, or do they hold a claim against a custodian or a special-purpose vehicle?

What Advisors Should Test Before Allocating

Mindyuk recommended comparing the tokenized share with the conventional share at the client's actual trade size, including fees and price impact, and checking price deviations from the conventional share during stress. In a liquidity pool, the displayed price is only a starting point: an order can move the price by changing the pool's asset balances. Advisors should examine who supplies that liquidity and whether they can keep doing so during volatility.

He also advised examining custody, transfer restrictions and the documented exit process if a venue closes or the tokenization arrangement ends. Advisors should require evidence of a specific benefit — better access, lower total trading costs, or settlement that makes funds available sooner — sufficient to the added operational risk and fit the client's investment objectives.

Also in the Newsletter

• The UK's Financial Conduct Authority opened its crypto authorization gateway. Firms have until Feb. 28, 2027, to apply for licenses covering stablecoin issuance, trading, custody and staking, ahead of the full regime launching in October 2027.
• Morgan Stanley has set up a Digital Asset Lab to test stablecoins, tokenization and DeFi applications, giving employees a dedicated facility to explore blockchain technology without risk to the bank's core systems.
• Robinhood will offer weekend trading in select U.S. stocks and ETFs, filling in the remaining gap after launching its 24 Hour Market in 2023.