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SEC, CFTC Advance Crypto Market Rules After CLARITY Act Setback
Tokenized Stocks, Longer Trading Hours and Developer Relief Move Ahead Separately
TL;DR
- The SEC created a five-year exemption for qualifying venues trading tokenized versions of U.S.-listed shares.
- The agency separately examined longer securities-market trading hours as tokenization changes how markets operate.
- The CFTC expanded conditional no-action treatment for software developers connecting users with regulated derivatives markets.
- The actions followed the Senate's failure to advance the CLARITY Act but do not replace comprehensive federal legislation.
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The SEC and CFTC advanced separate digital-asset and market-structure initiatives on September 17, 2026, days after the Senate failed to advance the CLARITY Act.
The SEC introduced a temporary pathway for tokenized securities and separately considered longer trading hours. The CFTC, meanwhile, expanded regulatory relief for qualifying software developers connecting users with derivatives markets.
SEC Creates Five-Year Tokenized Stock Exemption
The SEC's Innovation Exemption allows approved participants to trade blockchain representations of shares already listed on U.S. exchanges.
The exemption runs until September 17, 2031, unless amended earlier.
Tokenized shares remain securities and are intended to represent actual shares rather than synthetic copies. They should retain basic shareholder rights, including:
- Voting rights
- Dividend rights
- Rights to remaining assets during liquidation
Qualifying securities could trade outside conventional market hours, settle faster and potentially be held in eligible digital wallets.
Participation remains permissioned. Operators and users must satisfy applicable regulatory and sanctions requirements.
Companies can also block unrelated third parties from tokenizing their shares, while trading in a tokenized security must stop if the underlying stock is halted.
Initial offerings and margin trading are excluded.
The SEC also imposed volume limits:
- Large U.S. stocks: Up to 75 symbols and 0.25% of the previous month's average daily volume
- Less actively traded shares: Up to 250 symbols and 2.5% of average daily volume
Operators must publish detailed information at least 30 days before launching.
Exemption Does Not Replace CLARITY Act
The framework reflects a principle also contained in the stalled CLARITY Act: putting an existing security on a blockchain does not change its legal status.
However, the SEC action does not settle broader questions over which crypto assets fall under SEC or CFTC jurisdiction.
It also does not create permanent rules for crypto exchanges, resolve the treatment of DeFi, or address taxation.
The separate Digital Asset Tax Certainty Act could affect how stablecoins used to purchase tokenized securities are treated.
SEC Considers Longer Trading Hours
About an hour after announcing the exemption, the SEC held a Washington roundtable on expanding securities trading beyond conventional weekday sessions.
Chairman Paul Atkins said longer hours could allow investors to respond faster to events.
“We're moving of course to a new day — and night,” Atkins said.
He also argued tokenization could support real-time inventory management, improve efficiency and reduce settlement failures.
Commissioner Hester Peirce noted that “crypto markets certainly don't sleep,” but warned of possible wider spreads, increased volatility, technology risks and reduced human oversight during overnight periods.
Atkins said he had asked SEC staff to consider how expanded access could be paired with safeguards against harmful market behavior.
The extended-hours discussion remains separate from the tokenized-securities exemption.
CFTC Expands Relief for Software Developers
The CFTC separately issued a no-action position covering qualifying software developers.
Under specified conditions, the agency said it would not recommend enforcement action for failing to register as introducing brokers when developers simply connect users with designated contract markets.
The approach expanded earlier relief involving Phantom, which had sought to integrate derivatives trading into its software.
Developers must satisfy requirements including disclosures and appropriate policies and procedures.
A footnote indicated that the framework could apply beyond crypto-related software.
Solana Policy Institute General Counsel Patrick Wilson said the move transformed Phantom-specific relief into “a framework that other software providers can build around.”
Digital Chamber CEO Cody Carbone said it removed “a major regulatory ambiguity that's chilled software innovation in derivatives markets.”
Agency Relief Remains Less Durable Than Legislation
The SEC and CFTC actions provide regulatory pathways despite the CLARITY Act setback, but they remain different from enacted federal law.
The SEC exemption applies specifically to qualifying tokenized-securities venues. Its trading-hours initiative examines securities-market operating schedules. The CFTC position addresses whether certain software developers face introducing-broker enforcement.
CFTC Chair Michael Selig had previously discussed turning the earlier Phantom relief into formal rulemaking, but that process had not been completed by September 17.
That leaves the current measures potentially easier for future commissions to modify than finalized regulations or legislation.
For the crypto industry, the September actions showed that SEC and CFTC rulemaking could continue even with broader congressional market-structure legislation stalled, though the resulting framework remained narrower and less permanent than statutory reform.
