Tokenization brings crypto closer to Wall Street

US Treasury yields have returned to levels that would have seemed unlikely for much of the post-financial-crisis era. The five-year Treasury yield moved above 5 percent in September for the first time since 2007, while the Federal Reserve raised its target range by 25 basis points on September 16.

Against that backdrop, crypto is no longer operating at the edges of global finance. When Bitcoin emerged after the 2008 financial crisis, it was widely understood as a vote of no confidence in parts of the incumbent financial system. Nearly two decades later, the industry finds itself balancing that legacy of self-reliance with deeper integration into traditional markets.

Catching a break

The latest debate around the Digital Asset Market Clarity Act shows how far that relationship has moved. The bill advanced through the Senate Banking Committee earlier this year but failed to advance in a September Senate procedural vote. One day later, the US Securities and Exchange Commission took a separate step toward bringing tokenized equities into regulated US markets.

On September 17, the SEC issued a five-year, temporary and conditional “Innovation Exemption” for certain Tokenized Securities Venues. The exemption permits limited trading of genuine tokenized National Market System stocks through permissioned automated market makers and liquidity pools without treating qualifying venues as exchanges under the usual definition.