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Crypto's rulebook moves to the agencies after the Senate falls 11 short
The Senate blocked the Clarity Act 49-50 on Tuesday. By Thursday the SEC had published a tokenized-stock exemption its chairman tied to that defeat, on terms a future chairman can withdraw without a vote.
The Investor · Invest desk
What happened
- The Senate blocked the Clarity Act on a 49-50 procedural vote, well short of the 60 needed to advance crypto's market structure bill.
- CFTC staff issued a no-action position for passive software providers, and the agency sent a broader crypto markets rulemaking proposal to the White House.
- Spot bitcoin ETFs shed $450 million on Tuesday, their largest daily outflow since June according to SoSoValue data.
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Why it matters
- exposure A firm building a tokenized-stock business on the exemption depends on a permission that ends whenever the next chairman is appointed: Friedman said a Democrat-leaning chair could unwind everything Atkins does.
- contradiction Sticco treats agency rulemaking as near-equivalent to the statute, while Friedman says it is reversible within two years, so the same regime is being sold as durable and as reversible at once.
- decision Industry money and lobbying attention move toward comment letters and exemptive applications. Nobody is funding the Senate Banking negotiation that consumed the past year.
- constraint With no federal framework, the client-education burden lands on advisors; Friedman said it is "even more important that end investors use an advisor to get educated on this asset class."
How much the agency route is worth turns on how fast it can be undone. Don Friedman, CEO of the Digital Assets Council of Financial Professionals, told The Daily Upside that the agencies could become less crypto-friendly if a Democrat wins the White House in two years. He said a Democrat-leaning SEC chair would likely replace SEC Chairman Paul Atkins, and that such a chair could unwind everything Atkins does [14]. Atkins tied the SEC's new innovation exemption explicitly to the bill's failure to advance. The agency released it on Thursday as a pathway for tokenized U.S. stocks to trade onchain [4].
Joe Sticco, cofounder of Cryptex Finance, expects the agencies to land in roughly the same place the statute would have. "What you'll probably see is new rulemaking from both the SEC and CFTC that will make the rules for advisors and what they can participate in," he said. FINRA will also likely step up, he added [15]. "I don't really think that it'll be much of a difference versus Clarity" [16].
Bitcoin went from around $78,000 on Monday to about $76,000 at Wednesday's close [12], a decline of roughly 2.6 percent [2]. Friedman said it "was prudent for investors who were looking to either buy or sell to wait until there was clarity on whether or not this thing passed" [18].
The vote came 11 short of the 60 needed [1][1], after more than a year of bipartisan negotiation [20]. Three Republicans, Susan Collins, Josh Hawley and Jerry Moran, joined a unified Democratic bloc [2]. Industry fatigue is now pushing the same money away from Congress and toward the agencies [21]. Kristin Smith, president of the Solana Policy Institute, said "Congress had its chance and didn't rise to it" [7] and that "We're now looking to regulators for guidance, and that's the more viable path forward right now" [6].
In my view the exemption is worth less to a business plan than the statute would have been. The appointment calendar Friedman named is why. A chairman grants the permission and a chairman can take it back, and two years of build-out on that is a different capital commitment from two years of build-out on law. Two developments would argue against that. The seven Democrats who negotiated the bill called the vote "a setback, but not the end" and said they remained "committed to working in a bipartisan fashion" [8]. Sen. Angela Alsobrooks, who voted no, told Crypto In America "It's not going to die" [9]. Sen. Thom Tillis switched his yes to a no precisely to preserve the option of bringing the bill back [3]. The CFTC's broader crypto markets rulemaking is now sitting at the White House; for passive software providers the agency issued a staff no-action position [5]. If the rulemaking comes out as a finished rule, the cost of reversing it in 2029 goes up.
What to watch
- Whether the early efforts to restart bipartisan talks, reported by Crypto In America via three sources familiar, produce an actual negotiating table.
- Whether spot bitcoin ETF outflows continue past the single $450 million day, or reverse as Friedman's dollar-cost-averaging buyers step in.
- Whether any issuer or venue actually lists tokenized U.S. stocks under the SEC's new exemption, and on what terms.