The Clarity Act got 49 votes in the Senate on Tuesday. It needed 60 to advance. Democrats wanted officials and their families barred from crypto ventures, banks wanted a hard ban on stablecoin yield, and the compromise on offer satisfied neither. The result was widely anticipated. Markets seemed to shrug off the news quickly, resuming their recent positive momentum after a brief dip.
The next day both regulators said they would carry on regardless. SEC chair Paul Atkins said the agency would act “with or without legislation” under the authority it already has, and CFTC chair Mike Selig said his agency was “locked in and ready to ship” its rules. Coinbase CEO Brian Armstrong even suggested this might be “for the best”: the existing GENIUS Act allows more room for stablecoin rewards than the compromises made in Clarity.
On Thursday, the SEC followed through. Its new Innovation Exemption allows eligible platforms to offer onchain trading in tokenized U.S. stocks, using automated market makers and liquidity pools. Trading venues and qualifying liquidity providers receive temporary relief from exchange and dealer requirements. The shares remain securities, with voting and dividend rights preserved. Access is restricted, and companies can block their shares from being listed. That creates a route for the onchain trading model to reach U.S. equity investors under existing law.
The CFTC moved the same day. Wallet apps and other software that simply pass a customer order to a regulated derivatives exchange will not have to register as brokers with the agency, provided they hold no customer money, give no advice and take no cut of the trade. This was one of the contested points in the Clarity negotiations, now settled in a letter. Tax is moving too. A House committee approved the Digital Asset Tax Certainty Act 38-5 on Wednesday, setting out how mining and staking income is taxed, applying wash-sale rules to crypto and dropping the paperwork on very small payments. It still needs a vote in the full House.
Rules are less durable than a law, but one of the best protections against a hostile future administration is adoption. Once a technology is in everyday use, removing it becomes more painful and unpopular. Every tokenized fund, stablecoin payment corridor and onchain stock launched in the meantime is one more reason for the next administration to leave the rules alone.
This week’s market
- BGCI Index 1.22%
- Bitcoin –3.45%
- Ethereum 2.10%
- Solana 7.43%
All figures are week-to-date as of today 12:00 CET
Theta Blockchain Ventures content
- Ruud Smets, Managing Partner and CIO Theta Capital, with a brief update on what we believe is an important shift in blockchain adoption (watch here)
Blockchain news
- Senate Blocks CLARITY Act 49-50 With No Democratic Votes to Proceed (learn more)
- SEC and CFTC Chairmen Say They Will Write Crypto Rules Without CLARITY Act (learn more)
- SEC Clears Tokenized Stocks To Trade Onchain As CFTC Widens Software Relief (learn more)
- S&P Global agrees to acquire OpenZeppelin in onchain security push (learn more)
- Deutsche Bank plans bitcoin, ether custody for institutional clients in Europe (learn more)
- Circle debuts Arc blockchain which Jeremy Allaire calls ‘more consequential’ than USDC (learn more)
- European Central Bank calls for merchants to participate in digital euro pilot (learn more)
- Crypto Tax Bill Clears House Committee After Clarity Act Setback (learn more)
Relevant financial updates
- OpenZeppelin*, a security infrastructure company for onchain finance, was acquired by S&P Global for an undisclosed amount
- Kaiko, a crypto data platform, has raised $110mln in a Series B round led by Coinbase Ventures with investments from 14 others
- USDai*, a synthetic dollar protocol designed to finance physical AI infrastructure, has raised $40mln in a Debt Financing round led by K3 Capital
- Fin.com, an operating system for cross-border payments, has raised $20mln in a Seed round with investments from Coinbase Ventures, and 4 others
- Tare, a tool to power end-to-end credit lifecycle onchain, has raised $13.25mln in a Seed round with investments from Blockchain Capital, Stani Kulechov, and 6 others
- Velocity*, a stablecoin payments and treasury infrastructure platform, has raised $10mln in a Series A extension round with investments from Visa, Circle, Ripple, Haun Ventures, and 2 others
- Deadstock, an onchain collectibles marketplace, has raised $2.5mln in a Seed round with investments from Bullish
- Tenka*, an asset-backed finance platform, has raised $2mln in a Seed round with investments from Maven 11 Capital and Gami Capital
*Underlying TBV portfolio position | Prices as per 18/09
Interesting things to read and listen to
- What really happens when stocks trade and why we need tokenization, by Superstate (read here)
- Cloudflare CEO Matthew Prince explores how AI agents could fundamentally reshape the internet’s business model on the Empire podcast (listen here)