SEC grants crypto exemptions after Senate kills Clarity Act
- Senate gridlock killed the Clarity Act, ending statutory federal crypto market rules.
- The SEC bypassed Congress by launching ad-hoc exemptions for tokenized equity trading.
- Bitcoin ignored regulatory gridlock and rate hikes, surging past $81,000.
Congress failed, so regulatory agencies took the wheel. The US Senate effectively killed the Clarity Act in a 49-50 procedural vote, failing to reach the 60 votes required to pass a statutory framework for digital assets. Lawmakers had stripped criminal protections for non-custodial developers right before the defeat. Senator Cynthia Lummis warned the bill's failure leaves no realistic path for federal crypto market legislation for the rest of the decade.
Hours after the vote, SEC Chair Paul Atkins filled the void by issuing an Innovation Exemption for tokenized stocks. On Bankless, David Hoffman reported that the measure allows decentralized venues like Uniswap to host real equities without registering as broker-dealers. The exemption requires mandatory identity checks and caps daily volume at 0.25% per asset, sparking an immediate 30% rally in tokenization platform Securitize.
"Hours after the Senate blocked the Clarity Act 11 votes short of a supermajority, SEC Chair Paul Atkins released an Innovation Exemption for tokenized stocks."
- David Hoffman, Bankless
The administrative scramble did not stop at the SEC. Within 48 hours of the Senate vote, the Commodity Futures Trading Commission submitted new rulemaking to the White House to claim authority over crypto spot markets. Meanwhile, major brokerages like Kraken and Robinhood began routing products like onshore perpetual futures directly to US retail traders under existing derivatives rules.
The regulatory collapse arrived alongside aggressive tightening from central banks. Federal Reserve Chair Kevin Warsh led a unanimous 12-0 vote to raise interest rates to a target range between 3.75% and 4.00%. Normally, higher borrowing costs and political setbacks depress risk assets.
Crypto markets completely ignored the double blow. Bitcoin surged past $81,000 and eventually reached nearly $87,000. On The Jack Mallers Show, host Jack Mallers argued that rate hikes on a $40 trillion national debt stack actually act as fiscal stimulus. Higher yields force the Treasury to issue more dollars to cover mounting interest costs, inadvertently funding purchases of scarce assets like Bitcoin and gold.
"Jack Mallers points out that conventional Wall Street wisdom expected a sharp price drop. Instead, the market ignored the regulatory setback and absorbed the rate hike without flinching."
- Jack Mallers, The Jack Mallers Show
On Bitcoin And, David Bennett highlighted how yield differentials keep capital flowing despite central bank actions, while Grayscale research head Zach Pandl categorized the Fed's rate hike as a routine mid-cycle adjustment. On Bankless, Ryan Sean Adams noted that when digital asset prices climb through simultaneous regulatory and macroeconomic headwinds, the underlying market structure has decoupled from Washington.
Wall Street moved on without Congress.
Source Intelligence
- Deep dive into what was said in the episodes
ROLLUP: The Bull Market Test | Clarity Dies | SEC Opens the Door | Hyperliquid Comes Onshore • Sep 18
- Fed Chair Kevin Warsh led a unanimous 12 to 0 vote to raise interest rates to a target range of 3.75 percent to 4 percent. Haseeb Qureshi argues that the hike, which defied political pressure, demonstrates the central bank's sovereignty.
Also discussed on this episode: (9)
Markets (4)
- David Hoffman argues the market's positive price reaction despite double bearish news confirms crypto is in a bull market. Historically, insensitivity to negative events like rate hikes and legislative failures is a classic indicator of early cycle momentum.
- Zcash and Near Protocol are driving a middle-market recovery, which Ryan Sean Adams notes is abnormal for early bull phases. Near Protocol has seen significant adoption, with its confidential intents facilitating 30 billion dollars in cross-chain transactions.
- Tom Lee forecasts a major year-end stock market rally, predicting the S&P 500 could easily clear 8,200. Meanwhile, the bond market remains highly volatile as the US 10-year treasury yield surpassed 5 percent.
- Nick from Derive argues that on-chain options are gaining traction over perpetual swaps because they protect traders from volatility-induced liquidations. The Derive token reacted strongly to this trend, surging 150 percent over the past month.
BTC Markets (1)
- Michael Nadeau identifies a critical Bitcoin trading band between 69,900 and 80,400 dollars. Sustaining prices above the 50 week moving average of 80,400 dollars will provide decisive momentum confirmation that the market low occurred on June 30th.
Regulation (2)
- The Senate blocked the Clarity Act after a procedural vote fell 11 votes short of a supermajority. Ryan Sean Adams notes that Donald Trump's controversial history of family crypto dealings made the bill politically impossible for Democrats to support.
- The SEC issued its Innovation Exemption on September 17th, permitting whitelisted tokenized stocks with voting rights to trade on public blockchains. The exemption bypasses broker-dealer registration for decentralized exchanges but imposes a daily trading volume cap of 0.25 percent.
AI Infrastructure (1)
- Eric Voorhees highlighted massive growth on Venice, where daily AI token consumption has reached 250 billion. Venice uses 25 percent of its transaction fees to buy back its native VVV token, aligning value accrual with protocol utilization.
VC (1)
- S&P Global acquired smart contract security auditor OpenZeppelin. S&P Global is targeting Web3 infrastructure, directly absorbing a firm responsible for securing 37 trillion dollars in historically transferred blockchain value.