The Rundown: Tokenization dynamism clashes with policy stagnation

ISSUE #10 · September 25, 2026 · By Michael Casey

Welcome to the tenth issue of The Rundown.

Searching for a way to capture the contrast between a rapidly evolving tokenization industry and a stubbornly unchanging policy environment, I landed on a physics metaphor. We have a rapidly moving object running against solid, immovable resistance. Which one will succumb to the other’s greater force?

Does the weight of money and systemic change that’s driving tokenization ultimately overwhelm the policymakers, forcing their hand to write laws that catch up to the reality of this technological shift? Or does the weight of legal uncertainty and the restrictive nature of existing, out-of-date legislation – left in place with the U.S. Senate’s failure last week to pass the CLARITY Act on crypto market structure — stop the industry expansion in its tracks?

I’m inclined to expect the first outcome, partly because there is a modest outlet for policy advancement within Washington in place: America’s relatively crypto-friendly regulatory agencies aren’t waiting for Congress. This was seen with the SEC’s announcement of its innovation exemption rule last week, which, under certain conditions, exempts issuers of tokenized assets freedom from enforcement.

Still, as you can glean from this week’s interview with WilmerHale Partner Tiffany Smith in A Conversation With, the SEC’s actions are limited in scope. And while crypto companies are pushing the edges of the possible with projects outside the rule’s scope, there’s still considerable uncertainty over how the exemption will play out. There’s also the threat of lawsuits against the SEC by legacy institutions, as we’ve seen with the Chicago Mercantile Exchange’s suit against the Commodities Futures Trading Commission over its ruling that Bitcoin perpetual contracts were futures, not swaps.

With all these unanswered questions about the regulation of tokenized assets, we’re especially excited to be taking the Real-World Asset Summit to Singapore on November 17. The event takes place during the Singapore Fintech Festival, specifically within the confines of the Insights2040 Annual Meetings, which is run by SFF host GFTN. That parallel event gathers the world's most important regulators and biggest financial institutions to tackle questions of policy and financial technology. The Real-World Asset Summit will be in the middle of all that. Apply here to attend.

The Rundown

This week’s news flow captures this change-versus-regulation tension. On the industry side, we have new investments and partnerships across DeFi and TradFi adding to momentum. A partnership between the New York Stock Exchange and Blockchain.com looks like a bet by the 234-year-old exchange on the growing demand among crypto investors for tokenized stocks. In the other direction, crypto payments platform Moonpay is seeking an entrée into real-world assets, acquiring a mainstream investment platform. Also, are tech giants Google and Apple now exploring tokenization and stablecoins?

Meanwhile, more conservative actions among banks and their regulators seem to want to entrench the legacy financial system’s position against these changes. This is most evident in a flurry of activity around tokenized deposits — the bankers’ alternative to stablecoins. In Europe, a whole new system was unveiled to allow banks to clear tokenized deposits through the European Central Bank and, in Canada, another alliance of banks has been created to support tokenized deposits.

Here’s where the U.S. policy stance is quite different and, one could argue, more progressive, in its support for stablecoins. (Although Wall Street banks are getting behind tokenized deposits, regardless.) But that’s just one element of a complex policy landscape in Washington right now. Who better to discuss that than WilmerHale Partner Tiffany Smith? Have a read of her interview below before you dive into The Digest.

Tiffany Smith is a Partner at WilmerHale and Co-Chair of the firm’s Blockchain & Crypto Working Group. She has over fifteen years of experience advising and representing broker-dealers, financial institutions, and technology companies (including crypto companies) on cutting-edge regulatory and compliance matters.

Q: The Senate's failure to advance the Clarity Act was well signaled, but the tokenization industry seems to be moving forward regardless. Is there still hope for comprehensive market structure legislation, and how much does it matter if it doesn't pass?

A: It's unclear whether there's an opportunity for comprehensive market structure legislation. Some folks are saying that, depending on how the midterms come out, there may be some chance during the lame duck, but that's unclear. What that has done is unlock the ability of the SEC and CFTC to use their existing authorities. Take the innovation exemption. We've been hearing about it since the beginning of the year, and there were times when we were told it was coming out immediately, and then it stalled. I think one of the reasons it stalled was that they were waiting.

For some markets, products, or even market participants, that's perfectly fine. Tokenization in particular: if you're tokenizing a security or a commodity, you know you're tokenizing an asset that's subject to regulation. So what would Clarity actually do? Some versions of the draft legislation described certain tokenization models. There's a big debate about the issuer-sponsored tokenized securities model versus third-party sponsored, and some versions of Clarity talked about what was permitted.

Q: In the wake of that vote, the SEC went ahead and unilaterally wrote a new rule, creating an innovation exemption for tokenization. How much of a boost is this for the industry, and what does it say about its direction of the outlook for policymaking?

A: So from a tokenization perspective, I see the market as wide open. We do have the innovation exemption, which covers the markets that will provide trading of tokenized securities. That exemption only applies to models where you have the full rights and privileges of the underlying, so not synthetics, and you need the issuer's consent. It applies to certain market participants, and as Commissioner Peirce said in her speech, it doesn't apply to DeFi. In some respects, because there's no direct prohibition on synthetics, that opens the door to their issuers potentially finding a way to come to the US, but that's unclear.

Tokenization is different from other products because guidance can help that market. You can have custody guidance that gives custodians, and qualified custodians in particular, what they need to custody those assets. But what you can't do without legislative action is have a regulator for the spot crypto market. That's where we've seen states like Washington bring actions and say, "We're going to fill the void the SEC has left," and start saying these assets are securities. With no federal legislation, there's no preemption. So now both states and plaintiffs can bring actions against crypto platforms alleging they're offering illegal securities.

Q: What do you advise clients whose business models aren't covered, such as those issuing synthetics?

A: For synthetics, or anything else where we don't have clear guidance, the advice is to engage with the SEC and CFTC. Both have been very clear that they're open for business and willing to listen, so I see no reason not to engage. The innovation exemption addresses one model. If you have another model, go and explain why you think it's important: why, for global markets, it matters to have one asset that can trade both here and globally. Talk about liquidity. Talk about your experience offshore. That's what we have for the next two and a half years: regulators who want to understand this market and bring it onshore. So be forthright, have a discussion, and try to get to a place where you have some comfort that you can come onshore.

I was at an event a couple of days ago where a member of the Crypto Task Force said they're still taking feedback. The innovation exemption is just a starting point, and they're going to do more. If you want to attack a really complicated problem, you take one piece and say, "I'll start here," but that doesn't mean you're finished. Just because your business isn't addressed doesn't mean it won't be. It means they're still thinking about it, and there's a chance to engage and help shape whatever guidance eventually touches your business.

Q: Rulemaking, rather than regulation by enforcement, is what critics wanted from the last SEC. But without legislation behind it, is there a risk of backlash, or of the courts unwinding it?

A: To avoid the swings of different administrations, you need rules that are consistent, and that's why it's very important that the SEC and CFTC go through rulemaking. But yes, 100%. I think the SEC fully expects litigation over the innovation exemption. They're trying to counteract that with all of the roundtables and requests for public comment. If you read their releases, they go to great pains to lay out the process they followed before taking action. They talked not just to crypto firms but also to the incumbents, who may be less inclined to embrace this.

We're in an environment where people aren't afraid to sue their regulator. Someone made this point the other day: before the Gensler administration, suing your primary regulator was almost unheard of. We saw it happen at the SEC, and now at the CFTC, with CME suing them. That's partly how market participants feel, and it's also that, with Loper Bright, regulators get less deference. But that doesn't mean agencies shouldn't take action. They have to be super careful and aware of the risks, and protect themselves as best they can against potential litigation.

Q: CFTC Chair Mike Selig wants to bring offshore perpetual futures platforms like Hyperliquid onshore. Where does that stand, and could the CFTC's reach start to encroach on securities markets?

A: It's a little messy, and it's another example of having to be incremental. There's an open question about whether perps are futures or swaps, and that's in active litigation. Then there's the second question, which comes after you resolve the first: certain of these products can be security-based swaps or security futures. The dividing line is really whether the perp is tied to a security or the metrics of a security.

The more interesting thing, which gets less attention, is that what's happening offshore is peer-to-peer markets, even for perps. The way the Commodity Exchange Act is written, a swap or a future has to be on an exchange unless you're an [eligible] contract participant, which means you can't have retail off-exchange. So when we talk about bringing offshore companies onshore, do we mean bringing them onshore exactly as they exist offshore, as peer-to-peer markets? Or do we mean having them come through a regulated broker or market? Right now we're seeing the latter, but that's the bigger fundamental question looming in the background. As with any very hard regulatory and policy question, you take baby steps. Maybe the first version is letting these perps come onshore through a CFTC registrant, and a number of platforms are doing that. Will we at some point get to peer-to-peer markets, which the Commodity Exchange Act doesn't currently permit?

Q: Agentic AI raises big questions about delegated authority, tracing payments and, above all, digital identity. Is anyone in Washington grappling with them?

A: There are a bunch of discussions at different agencies with different folks, but there's really no comprehensive plan. David Sacks, as crypto and AI czar, had a mandate to work across agencies, because you need a comprehensive plan for both AI and crypto. For crypto, we had the President's Working Group report, with all the agencies involved. I haven't heard of an equivalent for AI, and that's the missing piece. The House Financial Services Committee has held roundtables and a couple of hearings on AI in financial services, including agentic AI, with French Hill and Ritchie Torres. But I think you need something at almost a presidential level to make these agencies work together on a comprehensive plan, because it's not just identity. It's national security, and there are environmental concerns. It's a whole-of-government effort. The EU already has its AI legislation, so we're behind. We're making a decision not to regulate, but we still need a plan that companies can be guided by, because they're still building. The innovation isn't going to stop.

On identity: it's UN Week, and on Monday I was in a discussion with some global finance ministers. The point they made that's really relevant is that when people talk about digital identity, they tie it to a better version of KYC, where you can KYC someone because they have an identity in a system. But how do you solve for people who don't exist in the system? People who are off the grid, who maybe only use crypto or cash. Just because someone has chosen not to be in the traditional identification system, don't we still want some mechanism for them to have a digital identity? We need to make sure we're including everyone, not just people who have a driver's license or a Social Security number.

The Digest

NYSE taps blockchain.com to reach crypto investors with tokenized stocks

We know from the rising activity in perps markets that crypto investors are getting excited about RWAs. That’s the context for this deal. While we tend to focus on how tokenization might add value for traditional investors, the manic world of crypto investing might actually be a better one to go after as a kick-start to volumes. So with the NYSE soon to unveil its tokenized equities platform, its arrangement with Blockchain.com, one of the oldest wallet providers in the industry, can be seen as direct distribution play.

MoonPay to acquire SEC-registered North Capital in $60 million all-stock deal

At the same time, this move by MoonPay — a wallet provider that competes with Blockchain.com — reflects a similar interest in this connection between crypto users and RWAs. North Capital looks like it will offer Moonpay a platform to offer RWA transactions to holders of its wallets.

Google and Apple seek crypto talent as Big Tech eyes stablecoin and tokenization rails

There’s a long tradition among media covering crypto trends to look at job openings as harbingers of corporate interest. Sometimes they reflect just an act of dabbling by the institution involved. Other times, it’s the beginning of something big. Are Google and Apple finally diving into stablecoin payments and tokenization?

Synthetic vs. direct tokenized stocks: who wins after the SEC exemption?

The SEC exemption was focused solely on tokens that put a claim on the underlying stock onchain, saying nothing about synthetic tokenization vehicles that don’t carry that core connection. In this smart conversation, Defiant Media founder Camila Russo explores with three industry experts what it means for the competition between these different models.

Canada's six biggest banks team up on a shared digital-dollar network

We’ve seen U.S. banks and European banks forge alliances around tokenized deposit networks. Now Canada’s biggest banks are doing the same. Will these consortia hold? Will they be effective against demand for stablecoins?

ECB deploys Pontes platform to settle wholesale tokenized assets in central-bank money

The European Central Bank’s newly unveiled Pontes system is the biggest bet by a government body on enabling tokenized deposits. It essentially upgrades the ECB’s existing real-time clearing system to ensure liquidity and consistent reconciliation across the financial system as tokenized deposits move around the eurozone.