Days after crypto market-structure legislation stalled in the Senate, U.S. financial regulators are stepping in to set rules on their own, according to a report from The Hill.
The Hill reports that Securities and Exchange Commission Chair Paul Atkins said in a statement on Thursday that Congress had been unsuccessful in advancing the CLARITY Act earlier in the week, despite what he described as the tireless efforts of many. Atkins said the SEC was taking a step forward, within its statutory authority, to bring U.S. capital markets into the digital age by facilitating onchain trading of certain tokenized stocks through what the agency calls the "Innovation Exemption."
Tokenized stocks are blockchain-based representations of equities, designed so that exposure to a company's shares can be recorded and transferred on a distributed ledger rather than solely through traditional clearing and settlement systems. Because such instruments can look like securities while trading on crypto infrastructure, they have sat in an uncertain position between existing securities rules and newer digital-asset platforms. An exemption pathway is the mechanism the SEC is using to allow some of that activity to proceed without firms first satisfying every registration requirement that would normally apply.
The move follows the collapse of the Clarity Act in the Senate. According to The Hill, the Senate rejected the bill on Tuesday after a failed vote on procedural hurdles, and the legislation appears to have little momentum left in the chamber. The report says that many in Congress and in the industry viewed the failed vote as the end of the line for the Clarity Act this year, and that one Senate Republican aide told The Hill their boss believed the measure was dead. Democrats, in a statement quoted by The Hill, said they had spent the last two years working to pass crypto legislation intended to expand opportunity, protect consumers, punish bad actors, create regulatory certainty and include ethics provisions for elected officials, and described the week as a setback rather than the end of that work. They said they remain committed to working in a bipartisan fashion to pass legislation.
With the bill stalled, The Hill reports that crypto firms are turning their attention toward regulators appointed under President Trump to shape the rules of the road. The Thursday announcement marks the latest in a series of such efforts. The SEC previously put forward rulemaking in August to create a pair of new exemptions that would allow issuers to offer crypto assets without needing to register first with the commission. The agency also clarified earlier this year what types of digital assets fall within its jurisdiction, noting that digital or tokenized securities are largely the only crypto assets in its domain.
That sequence matters because market-structure legislation like the Clarity Act was intended to settle, in statute, which agency oversees which digital assets — a question that has driven years of litigation and uncertainty for exchanges, token issuers and brokerages. Regulatory action taken through rulemaking, exemptive relief and staff guidance can move faster than legislation, but it can also be revised by a future commission or challenged in court, which is one reason parts of the industry have pushed for a law rather than agency policy alone.
Practical details of how the Innovation Exemption will work, including its scope, conditions and timing, will depend on the text the SEC puts forward and any comment process that follows. Market participants and observers are likely to watch for how broadly "certain tokenized stocks" is defined, whether trading venues face new disclosure or custody conditions, and whether the Commodity Futures Trading Commission takes parallel steps on assets outside the SEC's remit. Nothing about the announcement resolves the underlying jurisdictional questions that the Clarity Act was written to address, and no regulatory development guarantees any particular market outcome.
This is a news summary for general information only — not financial advice, and nothing here is a recommendation to buy, sell, or hold any asset. Always verify against the original source and do your own research before making a financial decision.
Source: The Hill · 2026-09-18
