The Clarity Act stalls. Tokenisation moves ahead.

The US Senate recently stalled a major crypto bill. Two days later, the US Securities and  Exchange Commission (SEC) opened a door for tokenised shares. For public blockchains,  this could ultimately matter more than the next crypto rally. 

By Pascal Huegli, Crypto Investment Manager at Maerki Baumann & Co. Ltd. 

It was meant to be the law that would finally give digital assets and public blockchain networks a  clearer regulatory framework in the United States. The proposal, better known as the Clarity Act,  still appeared promising at the start of the year. In February, the probability traded on Polymarket  that the bill would be signed into law in 2026 temporarily stood at around 80%. 

The setback came on 15 September. What had become increasingly apparent over the preceding  months became reality: the Clarity Act failed to advance in the US Senate. This was not yet a vote  on final passage, but a procedural hurdle on the way to consideration of the bill. Clearing it would  have required 60 votes. In the end, however, there were only 49 votes in favour and 50 against. 

The Clarity Act is not off the table, however, and could be reconsidered. If it is not passed before  the end of the congressional term, it would have to be reintroduced in the new Congress. 

The SEC moves ahead 

How would the Clarity Act have provided greater regulatory clarity? The proposal primarily sought  to distinguish more clearly between the responsibilities of the SEC (the securities regulator) and  the CFTC (the derivatives regulator). It also aimed to establish more reliable rules for token issu ers, trading venues, brokers, custodians and parts of decentralised finance (DeFi). The benefits  would have extended beyond individual cryptocurrencies to the wider ecosystem. Issuers could  better assess when a token qualifies as a security. Exchanges and brokers would have clearer  routes to registration. Institutional investors could invest on a more stable legal foundation. 

Interestingly, alongside the political process, regulators are now taking stronger initiatives of their  own. Just two days after the vote on the Clarity Act, the SEC, led by Chairman Paul Atkins, intro duced a temporary, five-year “Innovation Exemption”. It allows qualifying trading venues to trade  tokenised US shares directly on a blockchain through permissioned DeFi protocols, without hav ing to meet all the requirements of a traditional exchange. The tokens must give holders the same  economic and voting rights as the underlying shares. Where an independent third party tokenises  a share, the issuer must be notified and given the opportunity to object before trading begins. If  trading in a share is halted on its primary listing exchange, trading in its tokenised version on 

these platforms must also stop. The number of eligible securities and trading volumes are also  capped. Crucially for the crypto sector, the smart contracts must be publicly auditable and de ployed on a public, permissionless blockchain. 

Tokenisation gains ground 

This regulatory step supports those advocates of crypto technology who have long anticipated  closer integration between blockchains and the traditional financial system. Their argument is  that clearer regulatory boundaries can help the technology gain relevance beyond the crypto market. 

The key step is the tokenisation of traditional assets. Shares, fund units, bonds and other tradi tional assets could then be traded and settled on the same infrastructure as stablecoins and  crypto assets. A market is already taking shape. Excluding stablecoins, the value of tokenised  traditional assets recently stood at almost USD 40 billion. Of this, tokenised equities and ETFs  accounted for just $3.14 billion at the end of September. 

Table: Tokenised traditional assets on public networks  

The benefits of tokenisation are mainly evident in market infrastructure. Depending on their de sign, tokenised shares can, for example, be transferred around the clock, divided into small units  and settled against digital money. The transfer of ownership and settlement become more closely  integrated. Programmable rules can automate distributions or collateral management. In to kenised form, traditional securities can also serve as collateral or liquidity in blockchain applica tions, provided the necessary legal and technical conditions are met. 

New demand for public blockchains 

This development could be equally significant for public blockchains. So far, crypto trading has  often been their largest use case. Trading, collateralised lending, stablecoins and DeFi activity  often rise with risk appetite and the use of borrowed funds, and decline again in a crypto bear  market. Traditional assets bring another source of demand. If shares, money market funds or  bonds are routinely transferred, used as collateral and traded on blockchains, they generate ac 

tivity that could be less directly dependent on crypto prices. 

That is the strategic significance of tokenisation. Public blockchains would no longer move only  assets from the crypto world. They could gradually become an additional settlement layer for 

traditional capital markets. An enacted Clarity Act could provide a broader statutory basis for this  transition. Its delay slows progress, but does little to change the underlying direction. 

Maerki Baumann & Co. Ltd. 

The Zurich-based private bank Maerki Baumann & Co. Ltd. was founded in 1932. It focuses on its  core competencies in the areas of investment advice and asset management as well as in serving  independent asset managers. Steeped in tradition, the private bank owned by the Zurich-based  Syz family sets itself apart through its independence, security and transparency. With its innova 

tive modular investment approach and comprehensive crypto services, the private bank under lines its claim of combining the tried-and-tested with the new. The family company has more than  100 employees and approximately CHF 13 billion in client assets under management. 

Further information can be found at www.maerki-baumann.ch/en and www.archip.ch. 

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