Senate majority leader John Thune has filed cloture – which forces a final vote on a bill – on the proposed CLARITY Act for September 15, setting up a key procedural vote when lawmakers return. The bill needs 60 votes to pass, meaning Republicans will need to secure support from Democrats who, according to Reuters, remain opposed to parts of the legislation.
The delay has weakened expectations around the bill’s passing, with analysts warning that the limited legislative calendar and November elections could make passage difficult. However, there remains a lot of optimism among supporters that lawmakers can resolve the remaining conflicts.
Former New York governor Andrew Cuomo is among those expecting the legislation to pass. Speaking to Yahoo Finance, Cuomo said he expects Congress to approve the CLARITY Act once lawmakers settle a dispute over ethics provisions.
His comments come despite prediction markets lowering their assessment of the bill’s chances following the delay.
What is the CLARITY Act?
The Digital Asset Market Clarity Act is designed to establish a federal regulatory framework for digital assets and draw clearer boundaries between the SEC and the CFTC.
A key feature is the distinction between digital assets that should fall under securities regulation and those that should be treated as digital commodities. The legislation would give the CFTC a significantly larger role in overseeing digital commodity markets while maintaining SEC jurisdiction over digital assets that qualify as securities.
The legislation has become a major priority for the crypto industry, which argues that the current regulatory environment creates uncertainty over which rules apply to digital assets and the companies developing them.
That uncertainty is particularly relevant as financial institutions and public companies explore tokenization.
Tokenized securities move into focus
For IR professionals, one of the most important implications of the CLARITY Act could be how it supports the development of tokenized securities.
Tokenization involves representing a traditional financial security as a digital asset recorded, in whole or in part, on a blockchain or other crypto network. The SEC has already established that putting a security on a blockchain does not change its status as a security under federal law.
The Commission’s January statement on tokenized securities identified different models for tokenization, including securities where the issuer maintains ownership records through distributed ledger technology and third-party arrangements where a token represents an underlying security.
If tokenized equities and other securities become more widely adopted, companies will need to consider how traditional shareholder rights operate in an on-chain environment. Ownership records, shareholder communications, voting, dividends and other corporate actions could increasingly interact with blockchain-based systems.
