Finance18 September, 20263 min read
U.S. Senate Kills CLARITY Act as SEC Approves Tokenized Stock Innovation Exemption
This article is an automated aggregation of coverage from news outlets. Our editorials offer in-depth analysis curated by the NewsCord team.
SEC approves five-year Innovation Exemption enabling tokenized U.S. stock trading on-chain. Senate failed to advance CLARITY Act, letting SEC proceed without new legislation.
45 outlets told this the same way.
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CLARITY Fails, Rules Arrive
The U.S. Senate voted 49-50 on Sept. 15 against invoking cloture on the motion to proceed to H.R. 3633, leaving the CLARITY Act without the votes needed to advance in Congress.
CoinDesk reported that the cryptocurrency industry spent about $8 million on lobbying efforts connected to the Digital Asset Market Clarity Act during the first half of 2026, while an analysis of federal lobbying disclosures found crypto companies and industry groups spent more than $13 million on lobbying during the six-month period.
The SEC then moved quickly, issuing an “Innovation Exemption” that allowed certain venues to trade tokenized U.S.-listed stocks onchain using automated market makers and liquidity pools, and SEC Chairman Paul Atkins called it a “bridge toward durable rulemaking.”
The SEC’s exemption also created a five-year conditional path for tokenized securities venues, with the exemptions running from Sept. 17, 2026 through Sept. 17, 2031, and the order granting relief from the Exchange Act definition of “exchange” for qualifying TSVs.
The SEC’s approach framed the outcome as regulatory permission rather than legislative certainty, with CoinDesk’s newsletter noting that “Regulators have provided what Congress could not” after CLARITY failed to advance.
Who Benefits, What Changes
CoinDesk’s analysis said Coinbase was the biggest individual spender in the lobbying campaign identified by CoinDesk, spending about $2.2 million during the first half of the year on lobbying that included advocacy related to the CLARITY Act. Goldman Sachs and Citizens analysts said the SEC’s five-year innovation exemption could make Coinbase, Robinhood and Circle early winners of the tokenized-stock push, with the SEC’s framework creating a path for tokenized U.S. stocks to trade through automated market makers on public blockchains. The SEC’s Innovation Exemption required tokenized stocks to preserve shareholder rights such as dividends and voting, while venues faced limits on trading volume and the number of stocks they could offer.
The SEC also set a third-party tokenization process in which a TSV must inform the underlying public company before listing an unaffiliated third party’s tokenized version of its shares, then wait at least 30 days, and if the issuer objects within that period, the venue cannot begin trading the token. The Block’s Matt Hougan argued that “Crypto sacrificed long-term certainty and got better rules, faster,” while warning that a future administration could change course where Congress has not locked the rules into law.
Conditions, Risks, and Next Steps
The SEC’s order required a TSV to publish U.S. dollar-denominated transaction data within 10 minutes and keep at least 30 days of data freely available in machine-readable form, while also requiring a TSV to halt trading whenever the underlying stock is halted on its primary exchange. The exemption also barred primary issuance on a TSV, and it prohibited synthetic exposure, security-based swaps, linked securities, and third-party securities representing an interest in an SPV or other wrapper from qualifying under the regime. Galaxy Research’s newsletter said the exemption created a pathway to enable secondary trading of onchain $GLXY, noting that “onchain secondary trading of tokenized $GLXY has mostly been impossible” due to a lack of clarity on secondary trading of these instruments.
The U.S. order also limited participation by requiring that access to secondary trading of tokenized securities be limited to verified or credentialed participants, and it required smart contracts to be public, auditable, and deployed on a public, permissionless blockchain. AMBCrypto said the exemption “does not replace the CLARITY,” and it warned that the order did not clarify issues like what cryptos fall under the domain of the SEC and CFTC, or whether the order had an effect on the regulation of DeFi.