You’re reading Crypto for Advisors, CoinDesk’s weekly newsletter aimed at financial advisors navigating digital assets. Subscribe here for updates every Thursday.
Greetings, advisors!
In this edition, Alex Tapscott from CMCC Global Capital Markets discusses regulatory developments in the wake of stalled Congressional action.
Additionally, in the “Ask an Expert” section, Leo Mindyuk of ML Tech explains what ownership entails when purchasing tokenized stocks.
Enjoy the read!
Though the CLARITY Act did not pass, clarity in regulation has emerged.
Regulators have taken initiative where Congress has not, offering both immediate benefits and potential long-term challenges.
On September 15, the U.S. Senate missed an opportunity to establish a significant regulatory framework for digital assets, including tokenized currencies, stocks, bonds, and various intermediaries.
The failure of the CLARITY Act means that a comprehensive legal structure governing these assets will remain pending.
If enacted, the CLARITY Act would have bolstered American leadership in digital finance, benefitting consumers and providing banks with a clear path to invest and innovate in the evolving financial landscape.
Despite this setback, regulators have acted swiftly. Just two days post-CLARITY’s failure, the SEC launched an "Innovation Exemption", permitting certain platforms to trade tokenized U.S. stocks on-chain using automated market makers and liquidity pools. SEC Chairman Paul Atkins described this move as a “bridge toward durable rulemaking.”
Simultaneously, the CFTC has been working to eliminate obstacles, easing regulations for select software providers and updating its guidance regarding tokenized investments and blockchain recordkeeping.
With Congress failing to establish a regulatory bridge, officials like Atkins are proactively laying the groundwork.
A pressing question arises: can regulatory clarity effectively replace legislative clarity, and if so, for how long?
It seems regulators are acknowledging a fact Congress has yet to confront: the momentum of innovation is already in motion.
For widespread adoption, new technologies typically require three elements: effective technology, desirable products, and a regulatory environment conducive to development. The crypto sector appears to fulfill the first two criteria, and regulators are now striving to create the third.
Take Solana, for instance; it is capable of processing transaction volumes comparable to the combined equity, fixed-income, and foreign exchange markets. Platforms like Hyperliquid are beginning to challenge traditional commodity futures markets by offering continuous trading.
There is also a clear market demand. While stablecoins are currently the standout application in crypto, they are unlikely to be the last. Once digital currency becomes commonplace, users will seek avenues for saving, earning, and investing. Tokenized stocks and bonds, along with accessible on-chain markets, are poised to meet this need, not to mention the potential for innovative commerce with digital assets.
The primary obstacle to realizing this potential has been the lack of regulatory clarity.
CLARITY was meant to be a pivotal moment, enabling crypto firms, banks, and others to operate on an equal footing with clear regulations.
Can regulators bridge that gap?
For now, it appears they might be able to.
However, there is a significant distinction between regulatory approval and legislative assurance. Regulators can dictate current operational parameters, but legislation offers stronger protection against future regulatory changes.
This distinction is crucial for banks, exchanges, or asset managers investing billions into infrastructure that may take years to yield returns.
The future is not merely something to predict; it’s something to actively create.
Crucially, the next two years will determine how much progress can be made.
This presents an opportunity for the industry to establish tangible advancements: products that consumers genuinely use, infrastructure that financial entities rely upon, job-creating businesses, and functional markets that outperform previous models.
As blockchain technology becomes more integrated into the economy, it will be increasingly challenging for any future government—whether Democratic or Republican—to reverse progress.
However, this opportunity could be wasted. If the crypto sector focuses solely on fleeting gains reminiscent of previous cycles or continues to politicize the technology, it could forfeit a significant economic opportunity.
Innovators like Stripe, Circle, and Robinhood are unlikely to remain idle. Meanwhile, traditional financial institutions face a tough decision: wait for Congress to provide the certainty they desire or act based on the regulatory framework currently available.
While waiting may seem wise, it could ultimately prove more perilous.
The CLARITY Act may have faltered, but a form of clarity is still emerging.
The opportunity is present. The industry should capitalize on it by pushing through as many valuable innovations and products as possible.
- Alex Tapscott, CEO, CMCC Global Capital Markets
Ask an Expert
Q: What does the SEC's five-year "Innovation Exemption" entail after the CLARITY Act's halt?
A: The SEC has paved the way for eligible tokenized U.S. stocks to be traded on-chain via automated liquidity pools. Approved venues are exempt from registering as exchanges, and certain liquidity providers are relieved from dealer-registration requirements for specific activities. Participation is restricted to identity-verified individuals. This ruling came just two days after the Senate's failed vote on CLARITY. However, its scope is narrower than the proposed legislation, which also included tokenized securities. It allows a specific market model to evolve under the current SEC authority.
It is also a limited trial. Trading is restricted to a small percentage of each stock's usual volume, and margin trading is prohibited. The exemption is valid for five years, though the SEC retains the right to alter its terms or duration.
Advisors should view this as a restricted market test and seek evidence that a product enhances access or execution at their clients’ actual trade sizes.
Q: What does a client actually own when purchasing a “tokenized stock”?
A: Some offerings labeled as “tokenized stocks” provide synthetic exposure to a stock’s returns without granting shareholder rights. Payments that mimic dividends do not confer shareholder status. The SEC's new exemption sets a valuable benchmark: for trading on these platforms, a token must offer the same rights as the underlying share, including dividends, voting rights, and claims on company assets during liquidation. Synthetic exposure does not meet this criterion. If a third party tokenizes a company's stock without its involvement, it must supply proxy materials to holders, and the company must receive 30 days' notice and can prevent trading on that venue.
Advisors should thoroughly review the documentation outlining the client's rights. Verify how dividends and voting rights are communicated to the client. Determine if the token signifies direct ownership, an indirect interest in shares held in custody, or a contractual claim tied to stock returns. Most importantly, ascertain what the client can claim if the tokenization provider fails. Are they registered as a shareholder with the transfer agent, or do they hold a claim against a custodian or a special-purpose vehicle?
Q: After confirming the rights, what should advisors examine before making allocations?
A: I would compare the tokenized share's performance against the conventional share at the client's actual trade size, including fees and price impact. Assess price discrepancies from the conventional share during market stress. In a liquidity pool, the displayed price is merely a starting point: an order can shift the price by altering the pool’s asset balances. Investigate who provides that liquidity and whether they can maintain it during volatile periods.
Next, review custody, transfer limitations, and the documented exit strategy if a venue shuts down or the tokenization agreement concludes. Require evidence of a specific advantage, such as improved access, reduced trading costs, or quicker settlement times. These benefits should justify the additional operational risk and align with the client’s investment goals.
Continue Reading
- The UK's Financial Conduct Authority has opened its crypto authorization gateway. Firms have until February 28, 2027, to apply for licenses related to stablecoin issuance, trading, custody, and staking, in preparation for the full regime launching in October 2027.
- Morgan Stanley has established a Digital Asset Lab to explore stablecoins, tokenization, and DeFi applications, allowing employees to experiment with blockchain technology without risking the bank's core systems.
- Robinhood is set to offer weekend trading for select U.S. stocks and ETFs, completing its 24-Hour Market launched in 2023.
For more insights, visit coindesk.com for the latest crypto news and market updates.
Crypto for AdvisorsLatest Crypto News- 1NEAR Intents hit by $3.8 million exploit amidst ongoing crypto hacks1 hour ago
- 2Live Updates: Bitcoin remains near $84,000 ahead of Friday's U.S. jobs report4 hours ago
- 3Illinois agrees to a six-month postponement of crypto tax amid ongoing legal battles4 hours ago
- 4Crypto industry lost $1.26 billion to hacks while Bitcoin saw a strong quarter4 hours ago
- 5Synthetic tokenized stocks are detrimental to American investors5 hours ago
- 6Bitcoin opens new quarter within the $82,000-$85,000 range5 hours ago
- 7Citigroup increases 12-month Bitcoin price target to $113,000 as ETF inflows resume6 hours ago
- 8MetaMask security incident leads to Ethereum staking exits, no funds at risk8 hours ago
- 9Dogecoin launches DeFi testnet as DogeOS anticipates miners will secure its applications11 hours ago
- 10Bitcoin's slight inflation boost to $85,500 diminishes as bond yields remain high11 hours ago
The Definitive Stablecoin Landscape Series: Asia Pacific
The Definitive Stablecoin Landscape Series: Asia Pacific
As stablecoins enter regulated finance, the APAC region is emerging as a critical testing ground. This report outlines the area's regulations, use cases, and the role of RLUSD.
By CoinDesk ResearchSep 15, 2026Commissioned byRippleAs stablecoins penetrate regulated finance, APAC is becoming a pivotal proving ground. This report maps the region’s regulatory landscape, applications, and RLUSD's significance.
Why it matters:
As stablecoins move into regulated finance, APAC is becoming a key proving ground. This report maps the region’s rules, use cases, and RLUSD’s role.
View Full ReportMore From CoinDesk Indices