You’re reading Crypto for Advisors, Decryptnews’s weekly newsletter that breaks down digital assets for financial advisors. Subscribe here to get it every Thursday.
Happy Thursday, advisors!
In today’s newsletter, Alex Tapscott of CMCC Global Capital Markets discusses the regulatory rules being developed while Congress remains stalled, and how long this interim approach can sustain itself.
Next, in «Ask an Expert,» Leo Mindyuk of ML Tech explains what exactly a client owns when purchasing a tokenized stock.
Happy reading.
The CLARITY Act failed to pass. Regulatory clarity emerged regardless.
Regulators have delivered what Congress couldn’t, providing immediate benefits while creating longer-term risks.
On September 15, the U.S. Senate had an opportunity to establish foundational rules for digital assets and, by extension, the digital economy we’re entering. They didn’t take it.
The CLARITY Act’s failure means a comprehensive legislative framework for digital assets—including tokenized money, stocks, bonds, deeds, and other assets, along with the exchanges, brokers, issuers, and intermediaries that handle them—will have to wait.
CLARITY would have strengthened American leadership, benefited U.S. consumers, and, as I argued in Decryptnews recently, provided banks and legacy enterprises with a clear path to invest, build, compete—and potentially win—the future of financial services.
Nothing is more powerful than an idea whose time has come. For now, that time hasn’t arrived. But while Congress closed one door, regulators opened a window.
Both the SEC and CFTC moved with remarkable speed. Just two days after CLARITY failed, the SEC issued an «Innovation Exemption» allowing certain venues to trade tokenized U.S.-listed stocks on-chain using automated market makers and liquidity pools. Chairman Paul Atkins called it «a bridge toward durable rulemaking.»
The CFTC has also been removing practical barriers, providing relief to software providers and updating guidance on tokenized investments and blockchain-based recordkeeping.
Congress declined to build the bridge, so regulators like Atkins have started laying the planks themselves.
The question now is whether regulatory clarity can substitute for legislative clarity—and, if so, for how long.
Perhaps regulators recognize something Congress hasn’t fully grasped yet: the genie is already out of the bottle.
New technologies generally need three things to achieve mass adoption: working technology, products people want, and a regulatory environment that allows companies to build. Crypto increasingly has the first two. Regulators are now attempting to provide the third.
The technology is ready for prime time. Solana, for example, can handle the same transaction volume as equity, fixed-income, and foreign exchange markets combined. Platforms like Hyperliquid, which provide real-time, 24/7/365 trading in virtually any market, are beginning to eat into traditional commodities futures markets.
There’s also clear product-market fit. Stablecoins are crypto’s first killer app, but they won’t be the 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 and easy-to-access on-chain markets, will fill that role, and we haven’t even discussed the explosive upside of agentic commerce happening with digital assets.
The missing ingredient to unleash this capability has truly been regulatory clarity.
CLARITY was supposed to be the watershed moment: when 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 there’s an important difference between regulatory permission and legislative certainty. Regulators can tell companies what they may do today. Legislation provides greater protection against a future administration deciding something different tomorrow.
That distinction matters enormously to a bank, exchange, or asset manager committing billions of dollars to infrastructure that may take a decade to pay off.
The future, however, isn’t something to be predicted. It’s something to be achieved.
The key question is how much work can get done in the next two years.
This is an opportunity for the industry 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.
That 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 prefer or move under the certainty regulators can provide now.
Waiting may feel prudent. It may prove considerably riskier.
CLARITY didn’t happen. But clarity, of a sort, is emerging anyway.
The window is open. The industry should push through as many useful innovations and products as it can.
— Alex Tapscott, CEO, CMCC Global Capital Markets
Ask an Expert
Q: What does the SEC’s five-year «Innovation Exemption» change after CLARITY stalled?
A: The SEC has opened a pathway for eligible tokenized U.S.-listed stocks to trade on-chain through automated liquidity pools. Qualifying venues don’t 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 followed CLARITY’s failed procedural Senate vote by two days. Its scope is narrower than the proposed legislation, which also addresses tokenized securities. It allows a specific market model to develop under existing SEC authority.
It’s also a deliberately limited test. Trading is capped at a small fraction of each stock’s normal volume, and margin isn’t allowed. The relief lasts five years, but the SEC can modify its terms or duration.
Advisors should treat this as a limited market test and require evidence that a product improves access or execution at their clients’ actual trade sizes.
Q: If a client buys a «tokenized stock,» what do they actually own?
A: Some products marketed as «tokenized stocks» provide synthetic exposure to a stock’s returns without conveying shareholder rights. Payments that mirror dividends don’t make the holder a shareholder. The SEC’s new exemption sets a useful test. 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. 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 importantly, find 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 special-purpose vehicle?
Q: After verifying the rights, what should advisors test before allocating?
A: I would compare the tokenized share with the conventional share at the client’s actual trade size, including fees and price impact. Check 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. Who supplies that liquidity, and can they keep doing so during volatility?
Then examine custody, transfer restrictions, and the documented exit process if a venue closes or the tokenization arrangement ends. Require evidence of a specific benefit. For example, better access, lower total trading costs, or settlement that makes funds available sooner. Those benefits should justify the added operational risk and fit the client’s investment objectives.
Keep Reading
— The UK’s Financial Conduct Authority opens its crypto authorization gateway. Firms have until February 28, 2027, to apply for licenses covering stablecoin issuance, trading, custody, and staking, ahead of the full regime launching October 2027.
— Morgan Stanley sets 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.
Looking for more? Receive the latest crypto news from decryptnews.com and market updates from decryptnews.com/institutions.
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.
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.
RULES:
1. Keep all facts, meanings, and HTML structure (including images
and embeds
/).
2. Rephrase the text content of paragraphs and headings.
3. DO NOT remove or alter any HTML tags, image URLs, or tweet embed codes.
4. Produce a NEW title (same meaning, different wording).
5. Write a 1–2 sentence excerpt.BRAND-REPLACEMENT RULE:
The source of this article is ‘coindesk’. You are rewriting it for ‘Decryptnews’.
REPLACE (do NOT append, do NOT add a ‘ | ‘ suffix) every occurrence of the source name ‘coindesk’ with ‘Decryptnews’ in BOTH the title and the content.
For example: if the original title is ‘X by TechCrunch’, the new title must be ‘X by TechDaily’ (the brand name is substituted in place, not added as a suffix).
Do NOT add ‘| BrandName’ or any other brand suffix to the title.
Do NOT replace any other brand or site names — only the source name.
Do NOT output any ‘Topics:’, ‘Publisher:’, ‘Email:’, ‘Phone:’, ‘Related Stories:’, ‘More For You’ blocks.
