SEC Exemptions and CFTC Relief Boost Onchain Finance
The recent legislative setback for the CLARITY Act has not hindered the growth of DeFi. On September 17, the SEC introduced an 'innovation exemption' for tokenized stock trading, while the CFTC expanded no-action relief for certain software providers.
This regulatory progress is addressing the mechanics of the trading business, including which assets can move onchain and which mechanisms can facilitate trading. As operating boundaries become clearer, the investment case for DeFi could expand beyond trading activity within crypto to encompass the transfer and settlement of traditional financial assets.
The SEC's measure allows qualifying tokenized securities venues to trade certain tokenized U.S. stocks through automated market makers and liquidity pools with participant eligibility requirements. The CFTC's measure addresses user access, providing no-action relief for qualifying providers of 'passive software' connecting users with registered futures commission merchants.