CoinDesk
With Congress stalled on a federal crypto framework, financial firms are building their own compliance and market infrastructure. After the Senate failed to advance the CLARITY Act on Sept. 15, the SEC issued an innovation exemption two days later for certain venues to trade tokenized U.S.-listed stocks onchain. The exemption is not law and could be narrowed or withdrawn.
Why it matters
Firms are adapting to overlapping federal and state requirements rather than waiting for uniform rules. Uphold CFO Aravind Raju said compliance is among the company’s largest departments, with teams building solutions for individual states. He expects resources could be redirected if rules become clearer and more aligned.
Institutions have also launched private networks for tokenized assets, stablecoins and securities ledgers, but those networks are difficult to connect. Meanwhile, custody is separating from trading, reducing the risk that one firm controls every key function. Compliance checks are shifting from periodic reviews toward continuous transaction monitoring.
Market impact
These practices could shape how future regulation works in practice: verified counterparties, clearer separation between trading and custody, and ongoing compliance. But private networks that cannot easily communicate may add cost and complexity, while temporary exemptions leave institutions exposed to changes in permission.
For advisors assessing tokenized platforms, the core questions are what clients legally own and how they can recover assets if a platform fails. Due diligence also includes custody, independent verification, fees, conflicts and withdrawal restrictions. Raju predicted that within three years, tokenized Treasuries and money-market funds could become routine enough that firms stop using the word “crypto.”
Frequently asked questions
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What did the SEC allow after the CLARITY Act stalled?
Two days after the Senate failed to advance the bill on Sept. 15, the SEC issued an innovation exemption for certain venues to trade tokenized U.S.-listed stocks onchain.
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Why is compliance a major cost for crypto firms in the U.S.?
Firms face overlapping federal and state requirements. Uphold’s CFO said compliance is among the company’s largest departments because it builds solutions for individual states.
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Why are institutional blockchain networks difficult to connect?
Many institutions launched private networks for tokenized assets, stablecoins and securities, but those networks cannot easily communicate with one another.
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How is institutional crypto market structure changing?
Custody is increasingly separate from trading, reducing the chance that one firm controls every key function. Compliance is also shifting toward continuous transaction checks.
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What should advisors examine before recommending a tokenized platform?
They should establish what clients legally own and how assets can be recovered if the platform fails, then review custody, independent verification, fees, conflicts and withdrawal restrictions.
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