Clarity's failure could speed crypto innovation while shielding incumbents

Developers are watching whether regulators distinguish writing software from running a financial intermediary. Cathy Yoon, chief legal officer at Solana-focused research and development firm Temporal, said she hopes the SEC will recognize developers as software creators without turning their work into a securities enterprise.

“The fact that the SEC staff is even willing to say these things explicitly is a win,” Yoon said, while noting staff FAQs are not SEC rules.

Michael Lie, global head of digital assets at market maker Flow Traders, said he sees comprehensive regulation as inevitable as finance moves toward 24/7 trading. He is watching innovation exemptions and changes to transfer-agent rules, with European and Asian regimes already advancing.

The durability test

Legal experts see progress arriving in stages, with implementation the hardest part.

“The biggest gap is implementation,” said Derek Lowrey, head of legal at Newton Labs (formerly known as Magic Labs). Without legislation, overseeing venues, intermediaries, decentralized finance (DeFi) and spot markets remains harder, he said. Existing anti-money laundering, sanctions and record-keeping obligations nevertheless give compliant teams a basis to keep building.

Kevin Kreuser, general counsel at domain-name tokenization firm D3, said tokenized real-world assets particularly need clearer jurisdictional boundaries.

“Agency action is welcome, but it does not provide the same long-term certainty as legislation,” he said.