US Regulators Step In After Senate Stalls Crypto Regulation

The US crypto market faced a setback on September 15 when the Senate voted 49-50 against advancing the CLARITY Act, a bill aimed at regulating the industry. However, just two days later, the Securities and Exchange Commission (SEC) issued a five-year exemption for tokenized stock trading, while the Commodity Futures Trading Commission (CFTC) granted no-action relief for passive software providers.

The SEC's move allows qualified trading platforms to trade certain tokenized National Market System stocks on a permissioned automated market maker and liquidity pool basis. The framework requires tokenized stocks to provide holders with the same rights and privileges as equivalent traditional shares, and smart contracts must be public, auditable, and deployed on a public, permissionless distributed ledger.

The CFTC's no-action position gives qualifying providers of passive software relief from registration requirements under certain conditions. This move provides another segment of the crypto market with a clearer compliance framework without waiting for new legislation.