Oct 1, 2026, 11:00 a.m. EDT
6 min read
Greetings, advisors!
In today’s edition, Alex Tapscott representing CMCC Global Capital Markets discusses the regulations authorities are drafting while legislative efforts stall, and evaluates how long this situation can persist.
Following that, inside “Ask an Expert,” Leo Mindyuk from ML Tech clarifies what investors actually possess upon purchasing a tokenized equity.
Enjoy the read.
The CLARITY Act did not pass. Regulatory rules materialized anyway.
Authorities delivered what lawmakers could not, offering a temporary lift while introducing long-term risks.
On September 15, the United States Senate faced an opportunity to implement a critical milestone regarding guidelines for digital assets and the expanding digital economy.
That did not happen.
The CLARITY Act failed to move forward, meaning an official statutory framework for cryptocurrencies — covering tokenized cash, equities, debt instruments, titles, and other assets, along with the associated platforms, brokers, issuers, and intermediaries — would have to remain on hold.
Passing CLARITY would have reinforced American leadership, protected consumers, and, as I previously highlighted in CoinDesk, provided traditional banks and legacy corporations a transparent pathway to fund, construct, compete, and potentially succeed in the future of financial services.
Few forces match an idea whose moment has arrived. For the present moment, that time has not come. Yet, even as lawmakers closed a door, regulatory agencies opened a window.
Both the SEC and CFTC acted with remarkable speed. Merely two days following the defeat of CLARITY, the SEC established an “Innovation Exemption” permitting eligible trading platforms to execute transactions involving tokenized U.S. equities onchain via automated market makers and liquidity pools. Chairman Paul Atkins characterized this as a “bridge toward durable rulemaking.”
Simultaneously, the CFTC has eliminated operational hurdles, granting exemptions to select software developers and revising policies concerning tokenized assets and distributed ledger recordkeeping.
Since Congress chose not to construct the bridge, regulators led by figures like Atkins have begun positioning the planks themselves.
The central question now is whether regulatory guidelines can adequately replace legislative statutes, and if so, for how long.
Perhaps governing bodies understand a reality that lawmakers have yet to fully embrace: the phenomenon is already out of the container.
Emerging technologies typically require three elements for widespread adoption: functional technology, desirable products, and a regulatory framework empowering corporate development. Digital assets increasingly possess the first two. Regulatory bodies are currently striving to supply the third.
The underlying technology is fully prepared for mainstream integration. Solana, as an illustration, maintains the capacity to process transaction volumes matching the combined equity, fixed-income, and currency markets. Systems such as Hyperliquid, offering continuous, 24/7/365 trading across virtually all markets, are beginning to challenge conventional commodity futures exchanges.
Additionally, genuine product-market fit is evident. Stablecoins represent the initial successful use case for crypto, but they will not remain the only one. Once users experience digital currency, their subsequent demand involves saving, earning, and investing using those funds. Tokenized shares and bonds, supported by accessible onchain markets, will satisfy this requirement, even before considering the immense potential of agentic commerce enabled by digital assets.
The missing element required to fully unlock this capability has consistently been regulatory clarity.
CLARITY was projected to be the defining milestone: an era where crypto enterprises, traditional banks, and other entities could compete fairly with complete transparency regarding operational rules.
Can regulators bridge that void?
Perhaps they can, at least for the short term.
However, a significant distinction exists between administrative permission and legislative certainty. Regulators can inform businesses regarding permissible current actions. Legislation offers robust protection against an upcoming administration adopting an entirely different stance in the future.
This differentiation is vital for any financial institution, marketplace, or asset manager allocating billions toward infrastructure that might require a decade to yield returns.
Nevertheless, the future is not meant to be forecasted; it is meant to be realized.
The primary concern involves determining the volume of progress achievable over the next couple of years.
This period offers the industry a chance to establish real-world validation: consumer-tested products, reliable infrastructure utilized by financial institutions, enterprises generating employment and capital investment, and markets performing measurably better than prior systems.
As blockchain integrates deeper into the productive economy, reversing progress will become increasingly difficult for any future administration, whether Democratic or Republican.
That opportunity remains vulnerable to being wasted. Should the crypto sector spend this window pursuing rapid short-term profits characteristic of previous cycles, or continue polarizing the technology while alienating critics, a historic economic milestone could vanish.
Firms like Stripe, Circle, Robinhood, and other innovators are unlikely to pause their progress. Legacy financial institutions face a tougher decision: wait for legislative certainty from Congress or proceed under the current assurances offered by regulators.
Exercising patience might appear cautious. It may simultaneously prove considerably more hazardous.
CLARITY did not pass. Still, an alternative form of clarity is taking shape.
The window remains open. The sector should advance as many functional innovations and products as possible.
– Alex Tapscott, CEO, CMCC Global Capital Markets
Ask an Expert
Q: What adjustments does the SEC’s five-year “Innovation Exemption” introduce following the stalemate of the CLARITY Act?
A: The SEC has established a framework allowing qualified tokenized U.S. equities to trade onchain utilizing automated liquidity pools. Approved platforms are exempt from traditional exchange registration, while specific liquidity providers obtain relief from dealer registration mandates for applicable operations. Participation is restricted to verified individuals whose identities are confirmed. This directive emerged two days following the unsuccessful procedural vote on CLARITY in the Senate. Its scale is more limited than the proposed legislation, which also covers tokenized securities. It permits a specific market structure to evolve under current SEC jurisdiction.
Furthermore, this constitutes a deliberately constrained test. Transaction activity is capped at a minor percentage of standard trading volumes for each equity, and margin accounts are prohibited. The authorization spans five years, though the SEC retains the authority to adjust its conditions or timeline.
Advisors should approach this as a restricted market trial, demanding proof that any asset enhances accessibility or execution efficiency relative to their clients’ standard trade sizes.
Q: When a client purchases a “tokenized stock,” what do they actually hold?
A: Certain offerings marketed as “tokenized stocks” supply synthetic exposure to equity returns without granting ownership privileges. Distributions mirroring dividends do not elevate the holder to a shareholder status. The SEC’s recent exemption establishes a practical criterion. To trade on these systems, a token must incorporate identical rights to the underlying asset: matching dividends, equivalent voting privileges, and equal claims on corporate assets during liquidation events. Synthetic exposure fails to meet this standard. If an independent entity tokenizes corporate stock without company participation, it must distribute proxy documents to owners. Furthermore, the corporation receives 30 days of advance notification and retains the right to halt trading on that platform.
Advisors must examine documentation defining client entitlements. Verify the precise mechanism by which dividends and voting instructions reach the participant. Determine whether the digital token denotes direct ownership, an indirect shareholding preserved within custody, or a contractual agreement tied to equity performance. Crucially, ascertain investor claims if the tokenization provider encounters failure. Does the record designate the client as a shareholder through the transfer agent, or do they hold a claim against a custodian or special-purpose vehicle?
Q: Following the verification of rights, what factors should advisors test prior to portfolio allocation?
A: I recommend evaluating the tokenized asset alongside standard shares based on the client’s typical trade size, factoring in associated expenses and price impact. Monitor pricing divergences from conventional equities during periods of market stress. Within a liquidity pool, the visible price serves merely as an initial estimate; an order can alter valuation by shifting asset balances inside the pool. Identify the liquidity supplier and evaluate their capacity to maintain operations amidst volatility.
Next, evaluate custody protocols, transfer constraints, and the formalized exit procedure if a platform ceases operations or the tokenization agreement terminates. Demand documentation proving tangible benefits, such as improved availability, reduced overall transaction costs, or faster settlement cycles providing earlier fund access. Such advantages must offset the supplementary operational risks and align with the client’s financial goals.
Keep Reading
- The United Kingdom Financial Conduct Authority has launched its crypto authorization portal. Businesses have until February 28, 2027, to submit licensing requests concerning stablecoin generation, transactions, safekeeping, and staking, preceding the full framework launch in October 2027.
- Morgan Stanley is establishing a Digital Asset Lab to evaluate stablecoins, tokenized assets, and decentralized finance applications, offering staff a specialized environment to research blockchain systems without endangering core banking infrastructure.
- Robinhood plans to introduce weekend trading for selected domestic stocks and exchange-traded funds, bridging the gap remaining after the rollout of its 24-Hour Market in 2023.
Seeking additional insights? Access current cryptocurrency news via coindesk.com alongside market data through coindesk.com/institutions.
The Definitive Stablecoin Landscape Series: Asia Pacific
As stablecoins integrate into formal finance, the APAC region is emerging as a critical testing ground. This study outlines regional regulations, use cases, and the significance of RLUSD.
Why it matters:
As stablecoins integrate into formal finance, the APAC region is emerging as a critical testing ground. This study outlines regional regulations, use cases, and the significance of RLUSD.
Originally published at https://www.coindesk.com/coindesk-indices/2026/10/01/crypto-for-advisors-the-clarity-act-failed-but-the-rules-came-anyway.
