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💬Simon's Market Readout : Why the CLARITY Act’s defeat may accelerate tokenized stocks, with the SEC giving qualifying venues a five-year runway under existing law.

📰Stories You Can’t Miss: The SEC redraws the rules for onchain US equities; Circle takes Arc live with Wall Street validators; and BlackRock connects Hong Kong’s HKDAP to a tokenized money market fund open to retail investors.

After a long, winding saga, the CLARITY Act fell 11 votes short of the 60 needed to even begin floor debate. This has left the SEC and CFTC to pursue what they can under existing law, which turns out to be quite a lot.

And it seems like Trump's ethics concessions failed to win over key Democrats. And while this is sad, in my opinion, it does allow for the regulators to enact a different plan.

The SEC has already granted a five-year exemption for tokenized US stock trading two days later. This is a temporary conditional relief allowing certain on-chain venues to offer trading in tokenized US stocks using automated market makers and liquidity pools. Yes, that's DeFi, people.

There are two exemptions: one from a legal definition of an exchange and another from the definition of dealer for qualifying providers.

The tokenized shares must give holders the same rights as the equivalent conventional shares. That might impact the nature of what Robinhood's doing outside the US, for instance, where they are one-to-one backing the shares, but they can't necessarily allow those shareholders to vote in annual general meetings, for instance. So that same-rights thing could be really, really important.

Trading access must be permissioned even though the smart contracts run on a public permissionless blockchain. This is not a regulator that's given laissez-faire access to the US stock market. There are some conditions attached here, but you've essentially now got a five-year window in which tokenized stocks are potentially off to the races.

And if a future administration came and squashed this, after having said you've got a five-year exemption, that's going to be quite hard to unwind. I think that there's at least two years in which tokenized stocks are going to become a real, real thing.

And that's my message from this past few weeks on the tokenized front, which is people are just going to get on with it now. The saga may or may not have come to an end, but the regulators have moved.

In July we asked whether the tokenized stocks Robinhood was exporting would ever get a domestic on-ramp. The SEC built one this week and has created a five-year US pathway for tokenized stocks. Neither Robinhood's nor Coinbase's current offshore product fits it as is.

It came two days after the Senate failed to advance the CLARITY Act. It also lands after two weeks in which AMC and Robinhood argued over when a public company should have a say in financial products built around its shares.

The SEC went further than Tenev's own test for when issuers should get a say.

Tenev argued during the AMC dispute that issuer involvement belongs only when tokenization changes shareholder rights, creates new obligations for the company or its transfer agent, or changes the official shareholder record. If those things remain untouched, his argument was that issuer approval should not be required.

The SEC designed its model to preserve those rights. Third-party tokens must pass through dividends, votes and liquidation claims, while proxy materials must reach token holders at no cost to the company or its shareholders. The issuer still gets 30 days to object.

Robinhood's Jersey debt token sits outside that model. A US version would need a different legal structure and shareholder rights, then face the issuer objection window if Robinhood tokenized the stock without the company's involvement.

Coinbase and Robinhood are approaching the US model from opposite ends.

Coinbase leads with legal structure, promising no synthetics or debt and a direct claim on real shares. Robinhood leads with function, adding redemption and voting to a debt instrument. Neither yet delivers the vote the SEC names.

Robinhood welcomed the exemption within hours. Its post and Tenev's praised instant settlement, 24/7 trading and fractionalization, without mentioning the shareholder rights or issuer objection that decide which third-party tokens can trade under the exemption.

The exemption expires in five years, and Atkins says it must be followed by durable rulemaking. CLARITY failed to advance this week, leaving the SEC to create an interim route under existing law. If these conditions carry into permanent rules, offshore wrappers stay an export product. Onshore, the contest is who can deliver the vote, the dividend and the share itself without the issuer objecting.

Editor's Note: Simon Taylor, co-creator of Tokenized, works at Tempo. The analysis below represents the views of Tokenized's other editorial contributors and does not reflect Simon's perspective or involvement.

Circle has opened Arc’s public mainnet, six months after Stripe-incubated Tempo went live. Arc brings Circle's stablecoins, payments network, FX infrastructure and tokenized assets onto one Layer 1, with some of the largest institutions in finance lined up to help operate it.

Some of the institutions helping run payments blockchains are backing more than one.

Visa and MoneyGram run validators on Tempo and sit in Arc’s founding cohort. Standard Chartered is in Arc’s cohort, while Zodia Custody by Standard Chartered is an external validator on Tempo. Visa has also been selected as one of 40 Super Validators on Canton. That is infrastructure optionality. Institutions can participate across networks while keeping the larger commitment, transaction volume, open.

What separates Arc is how much of the stack Circle owns.

Circle Payments Network handles cross-border payments. StableFX handles currency conversion. USYC supplies tokenized collateral. Circle has also minted a network token designed for security and governance if Arc moves to Proof of Stake.

Arc can carry a bank's own money, but the network fee attached to that transaction is still paid in USDC.

Arc also gives Circle a route to economics outside its Coinbase USDC revenue-sharing agreement. As we covered in May, Circle allocated itself 25% of ARC's initial supply, while institutional investors have bought 807.5 million tokens at $0.30, implying a $3 billion fully diluted value. The Coinbase collaboration agreement shares USDC reserve economics; ARC sits outside that payment base

That fits Circle's broader move down the payments stack. Last week it agreed to acquire Tazapay, a Circle Payments Network design partner since 2025 with more than $25 billion in annualized payment volume. Tazapay brings more origination and payout infrastructure in-house. Arc takes Circle further into the settlement layer underneath it.

Tempo made a different call on fees,accepting multiple supported stablecoins and reserving dedicated blockspace for payments. That helps explain the multi-homing - Arc standardizes fees in USDC, while Tempo leaves the fee asset open across supported tokens.

Logos tell us less than flows will. Over the next two quarters, watch settlement volume by use case, which assets carry that volume, and whether Arc expands beyond its 11 named founding institutions.

If Arc adopts Circle’s proposed Proof of Stake design in 2027, ARC becomes the staking and reward asset behind validator economics. That puts a new question in front of the institutions running Arc infrastructure: do they want token exposure embedded in that operating role?

Hong Kong has approved a tokenized money market fund that will accept HKDAP, with Standard Chartered on both sides.

Last month we said HKDAP needed asset managers to show up (read more here). Now BlackRock has.

The fund gives HKDAP holders somewhere to earn. Hong Kong bars licensed stablecoin issuers from paying holders interest. HKDAP stays as payment and settlement money, while BlackRock's fund gives holders a yield-bearing asset one step away. Standard Chartered named tokenized money market funds as one of HKDAP's first use cases when it became the stablecoin's bank distributor in August. Now BlackRock is attached to it.

Scale is the caveat. Anchorpoint's latest published data shows just HK$778,450 (~US$100,000), of HKDAP in circulation as of 9 September. The product is arriving before the stablecoin has scale.

The first customers are likely to be institutional HKDAP users. Instead of converting HKDAP back into fiat before investing, they will be able to subscribe directly with HKDAP and redeem back into it. Retail investors will be able to buy the fund, but not with HKDAP while the stablecoin remains in beta.

The missing piece is 24/7 access. HKDAP moves at any hour, but BlackRock has not said the fund will take subscriptions and redemptions around the clock. For money that never closes, a fund with limited dealing hours would only solve part of the problem.

Secondary trading could provide the off-hours route. The SFC's April pilot lets tokenized money market funds trade on licensed VATPs outside normal market hours, using regulated stablecoins or tokenized deposits. OSL and HashKey distribute HKDAP and operate licensed platforms. BlackRock has not announced a listing on either.

If the fund lists on a licensed VATP with HKDAP as the settlement asset, a Hong Kong treasury could sell its fund units for HKDAP on a Sunday night.

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