The U.S. Senate did not move the CLARITY Act forward, but regulators began acting almost immediately.
In CoinDesk’s weekly Crypto for Advisors newsletter, Alex Tapscott, CEO of CMCC Global Capital Markets, said Congress failed to deliver a comprehensive legislative framework for digital assets, yet the Securities and Exchange Commission and the Commodity Futures Trading Commission have started providing a narrower form of clarity through existing authority.
CLARITY stalled, and regulators responded within days
According to the newsletter, the Senate had a chance on Sept. 15 to advance the rules for digital assets and the broader digital economy. The CLARITY Act failed to advance, leaving a broader statutory framework for tokenized money, stocks, bonds, deeds and other assets, along with the exchanges, brokers, issuers and intermediaries involved in them, still on hold.
Tapscott wrote that as Congress closed one door, regulators opened a window.
Just two days after CLARITY failed, the SEC released an “Innovation Exemption.” The order allows certain venues to trade tokenized U.S.-listed stocks onchain using automated market makers and liquidity pools. SEC Chairman Paul Atkins called it a “bridge toward durable rulemaking.”
The CFTC also moved to remove practical barriers. The agency provided relief to certain software providers and updated guidance related to tokenized investments and blockchain-based recordkeeping.
Tapscott framed the shift plainly: Congress did not build the bridge, so regulators have started laying the planks themselves. His question is whether regulatory clarity can stand in for legislative clarity, and for how long.
Tapscott’s argument: technology and products are here, rules are catching up
Tapscott argued that mass adoption of a new technology usually depends on three things: technology that works, products people want and a regulatory setting that lets companies build. In his view, crypto increasingly has the first two, and regulators are now trying to supply the third.
He cited Solana as an example, saying it can handle the same transaction volume as the equity, fixed-income and foreign exchange markets combined. He also pointed to Hyperliquid, describing it as a platform that offers real-time, 24/7/365 trading across nearly any market and is beginning to cut into traditional commodities futures markets.
On the product side, Tapscott said stablecoins are crypto’s first major application, but not its last. Once users get digital money, he wrote, the next thing they tend to want is a way to save, earn and invest with it. Tokenized stocks and bonds, together with convenient and accessible onchain markets, could fill that role. He also referenced what he described as the explosive upside of agentic commerce built around digital assets.
Still, he drew a sharp line between regulatory permission and legislative certainty. Regulators can tell companies what they may do now. Legislation offers stronger protection against a future administration deciding something different later. That distinction matters, he wrote, for banks, exchanges and asset managers that may commit billions of dollars to infrastructure with a payoff horizon that could stretch a decade.
A two-year opening for the industry
Tapscott said the central issue now is how much can be built over the next two years.
He sees a chance for the industry to create facts on the ground: products consumers actually use, infrastructure financial institutions rely on, businesses that employ people and deploy capital, and markets that work better than what came before.
The more deeply blockchain becomes embedded in the productive economy, he argued, the harder it becomes for any future government, Democratic or Republican, to reverse course.
He also warned that the opening could be wasted. If the industry uses this period to chase the same short-term gains seen in prior cycles, or keeps politicizing the technology and alienating those it disagrees with, the opportunity could be lost.
Tapscott singled out Stripe, Circle and Robinhood as innovators unlikely to wait. Established financial institutions, he wrote, face a harder decision: wait for Congress to provide the certainty they would prefer, or move ahead under the certainty regulators can offer now.
His conclusion was direct: CLARITY did not happen, but a version of clarity is still emerging. The window is open, and the industry should push through as many useful products and innovations as it can.
What the SEC’s five-year Innovation Exemption changes
In the newsletter’s “Ask an Expert” section, ML Tech CEO Leo Mindyuk addressed several practical questions about tokenized stocks.
On the SEC’s five-year Innovation Exemption, Mindyuk said the agency has opened a pathway for eligible tokenized U.S.-listed stocks to trade onchain through automated liquidity pools.
Qualifying venues do not need to register as exchanges, and certain liquidity providers receive dealer-registration relief for covered activities. Trading is limited to identity-verified participants. Mindyuk noted that the order arrived two days after CLARITY failed in a procedural Senate vote.
He also said the exemption is narrower than the proposed legislation and allows a specific market model to develop under existing SEC authority.
The test is intentionally limited. Trading is capped at a small fraction of each stock’s normal volume, and margin is not permitted. The relief lasts for five years, although the SEC retains the ability to change its terms or duration.
Mindyuk said advisors should treat this as a limited market test and ask for evidence that a product improves access or execution at the client’s actual trade size.
What a client owns when buying a tokenized stock
Mindyuk said some products marketed as tokenized stocks offer synthetic exposure to a stock’s returns without granting shareholder rights. Payments that mirror dividends do not, by themselves, make the holder a shareholder.
He pointed to the SEC’s new exemption as a useful test. To trade on these venues, a token must carry the same rights as the underlying share, including the same dividends, the same votes and the same claim on company assets in a liquidation. Synthetic exposure does not qualify.
If a third party tokenizes a company’s stock without that company’s involvement, the third party must deliver proxy materials to holders. The company also receives 30 days’ notice and may block trading on that venue.
Mindyuk said advisors should read the documents that define the client’s rights, verify how dividends and voting rights 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.
He said the most important issue is what the client can claim if the tokenization provider fails. The advisor should determine whether the client is recorded as a shareholder with the transfer agent or instead holds a claim against a custodian or a special-purpose vehicle.
What to test before allocating
After confirming the rights attached to the token, Mindyuk said he would compare the tokenized share and the conventional share at the client’s real trade size, including fees and price impact.
He also advised checking how far the tokenized instrument can deviate from the conventional share during stress. In a liquidity pool, the displayed price is only a starting point because an order can move the price by changing the pool’s asset balances. That makes it important to know who is supplying liquidity and whether that liquidity is likely to remain during volatile periods.
From there, he said advisors should examine custody arrangements, transfer restrictions and the documented exit process if a venue shuts down or the tokenization structure ends.
He said any allocation should be backed by evidence of a specific benefit, such as better access, lower total trading costs or settlement that makes funds available sooner. Those benefits, in his view, should justify the added operational risk and fit the client’s investment objectives.
Three additional developments cited in the newsletter
- The U.K. 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, before the full regime begins in October 2027.
- Morgan Stanley created a Digital Asset Lab to test stablecoins, tokenization and DeFi applications, giving employees a dedicated facility to explore blockchain technology without putting the bank’s core systems at risk.
- Robinhood plans to offer weekend trading in selected U.S. stocks and ETFs, filling the remaining gap after launching its 24 Hour Market in 2023.