Two days after the Senate refused to advance comprehensive crypto market-structure legislation, U.S. regulators moved on their own to give the industry narrow, tightly conditioned access to two of its most sought-after prizes: tokenized stocks and easier connections to derivatives markets. The Securities and Exchange Commission and the Commodity Futures Trading Commission each issued relief on Sept. 17, 2026, using existing statutory and staff authority rather than new law, after the Senate’s 49-50 vote against cloture on the motion to proceed to H.R. 3633, the CLARITY Act.
The timing was not coincidental. The Senate’s failure, detailed in an earlier report on the vote and its market impact, left the SEC and CFTC without the clearer statutory jurisdiction the bill would have provided. Rather than wait for Congress to try again, both agencies reached for tools they already had.
What the SEC and CFTC actually did
The SEC created a five-year conditional exemption it calls the Innovation Exemption, running through Sept. 17, 2031. It allows permissioned trading venues, termed Tokenized Securities Venues, or TSVs, to facilitate trading of tokenized versions of U.S. stocks using automated market makers. The exemption is structured in tiers. Tier 1 permits up to 75 tokenized stock symbols per TSV and its affiliates, with trading volume capped at 0.25% of a stock’s prior month average daily share volume. Tier 2 allows up to 250 symbols, with a volume cap of 2.5% of average daily volume. Issuers of the underlying stocks get at least 30 calendar days’ notice and a window to object before their shares can be tokenized on a venue.
Crucially, the exemption does not suspend existing securities law. Antifraud provisions, anti-money-laundering requirements and Securities Act obligations still apply; the SEC is easing procedural friction, not the underlying legal accountability. That distinction separates this framework from earlier speculative visions of tokenization as a way around securities regulation altogether, a point explored in coverage of the SEC’s move to open a multitrillion-dollar equity market to onchain trading.
The CFTC took a parallel but separate step. Its Market Participants Division issued Letter 26-25, which generalizes no-action relief first granted only to the wallet provider Phantom under Letter 26-09 in March 2026. The new letter extends that relief to passive software providers broadly, meaning crypto wallets and similar tools can connect users to registered derivatives markets without registering as introducing brokers. That change, and what it means for wallet providers navigating U.S. derivatives rules, is examined in a separate report on the CFTC’s decision to let crypto wallets skip broker registration.
What this means for the industry
For an industry that spent months lobbying for the CLARITY Act as the vehicle to finally define which agency oversees which crypto activity, this is a consolation prize with real but limited value. The SEC and CFTC actions prove that regulators can act without Congress when they choose to, using exemptive authority and staff no-action letters rather than statute. That is faster than legislation, but it is also inherently less durable. An exemption granted by the SEC can be modified or revoked by the SEC; a no-action letter reflects the CFTC staff’s current enforcement posture, not a binding legal rule. Neither carries the permanence that a market-structure law passed by Congress would provide.
The caps embedded in the SEC’s framework also signal caution rather than a wholesale embrace of tokenization. Limiting Tier 1 venues to 75 symbols and a quarter of a percent of trading volume, and Tier 2 venues to 250 symbols and 2.5% of volume, keeps any early tokenized-stock market a small fraction of the underlying equity market’s activity. The issuer objection window adds another layer of control, giving public companies a say before their shares appear in tokenized form on a new venue. This is a regulator testing a mechanism carefully rather than throwing open the doors.
On the derivatives side, generalizing the Phantom relief to all passive software providers removes a specific point of friction that had limited which wallets could plug users into regulated futures and options markets. It is a narrower fix, but one that directly affects how easily everyday crypto users can reach CFTC-regulated products through the wallets they already use.
What to watch next
As of publication, no company has publicly committed to launching a Tokenized Securities Venue or otherwise operating under either new pathway, so the practical test of this framework has not yet begun. Readers should watch for the first venue applications and issuer objections, since those will reveal how the 30-day consent window functions in practice. It is also worth tracking whether Congress makes another attempt at market-structure legislation, given reporting that the CLARITY Act’s underlying push survived the failed vote through a procedural maneuver, and whether industry frustration translates into the political pressure described in accounts of the crypto lobby’s promised midterm reckoning. Finally, because both the SEC exemption and the CFTC letter rest on agency discretion rather than statute, any change in leadership or policy priorities at either commission could alter or unwind the relief well before its formal 2031 expiration.
Source: CryptoSlate
This content is for informational purposes only and does not constitute financial or investment advice.
Create a free account to comment and earn rewards.
Create account Log in