Humans love fighting their last war.

The crypto lobbyists in Washington have been urgently pushing to pass Clarity, the crypto legislation that came out of the House strong, or something like it. Fresh law, the argument goes, would tie the hands of any incoming administration that might be hostile to the industry, like Biden was.

But there won’t ever be another administration like Biden’s. At this point, legislation doesn’t matter that much.

Another way to say this: Let Paul Atkins cook.

The current SEC Chair, Crypto Uncle Atkins, has said from the start that existing law is sufficient to regulate the cryptocurrency markets.

But all the attention has gone to Senators, who can’t seem to even get a committee vote pulled together, while SEC staff have held about a half-dozen hearings and are likely plugging away on draft rules as I write this.

Meanwhile, the Senate Banking Committee comms team emailed reporters yesterday afternoon to say that they were hoping to get a market structure measure before the committee in “early 2026.”

• womp, womp

• First it was September. Then it was Thanksgiving. Then it was by year’s end. Now? It’s early 2026.

Clarity? Down bad.

It’s fine, though.

Try this story on for size:

1. Next year, the SEC promulgates new rules around the issuance and trading of digital assets.

2. They issue a variety of cautions around the tokenization of equities as well, making it clear you can’t just do it willy-nilly.

3. By 2027 there are rules around equity tokenization, too.

4. Stablecoins trend up over this whole period — nothing dramatic goes wrong with the ones running under GENIUS.

5. By early 2028, we start to see more real-world asset tokenization kick in. Property. Equities. Fixed income. Vehicles. Collectibles maybe take off.

6. These real-world asset tokens begin to get deployed in some regulated DeFi products, which cracks open a bit of new, somewhat stable looking yield.

7. This causes a general bullish sentiment to kick in, such that it won’t matter much if a Republican or Democrat turns out to be the next President.

8. WAGMI.

And all of those pieces are possible with nothing but action from the SEC and aligned actions by the CFTC.

If DC gives US citizens a way to freely trade cryptocurrencies, create new ones and some modest ways to plug these networks into the real world, that’s a recipe for growth. It’s probably a recipe for a fresh boom,1 but I don’t want to overstate it. There are those who believe I am quite wrong about this.

That story doesn’t sound like much of a stretch to me.

Other DC authorities are giving the industry a greenlight to actually interact with the real economy.

The Office of the Comptroller of the Currency (OCC), one of the three prudential banking regulators in the US, approved five banks as trusts last week, which will allow them to run stablecoins under the GENIUS Act, the stablecoin law that did get passed this year.

The OCC also cleared regular banks to engage in riskless activity with cryptocurrencies. While I frankly think it’s weird they even have to ask permission to do this, it means that they can start offering a lot more basic financial services to companies in this space, such as brokering basic crypto trades.

This obviously opens up the crypto market to a lot of companies who aren’t up for diligencing any new counterparties for their market activities. But if their existing bank can broker? They might trade some coin.

And then the Commodity Futures Trading Commission (CFTC) is tentatively letting traders on its exchanges post a few blue-chip cryptocurrencies as collateral to back their positions. And it’s letting Polymarket come back.

The Trump administration rolled out an aggressive plan to give the legal, upstanding end of the crypto industry access to the same financial tools other legal companies have. And it’s happening.

But while the suits in DC are chugging forward, the guys in hoodies fret about the past.

Roll back the tape

Let’s look back in time.

The main problem for the industry so far has been sorting out which digital assets are securities and which ones are not.

Folks have been loath to talk about this too explicitly, but here’s the deal: If all (or most) cryptocurrencies were securities they would become basically useless.

• Private securities can only be held by so-called “accredited investors.” Basically, wealthy people.

• And they can only be traded on a regulated securities exchange, which shuts down all sorts of use cases, like NFT-gated events, Filecoin nodes, DePIN bandwidth sharing and liquidity provision on Uniswap.

• All usage of these assets would be nixed because the only way they could be held and traded would be trapped on exchanges, within a framework that presumes that trading is really the only thing a person can do with securities.

But it is perfectly within the SEC’s authority to create some guidelines here, and every indication suggests that that is just what SEC staff is working on.

That’s why, when you look at history, this issue of how to characterize tokens and coins has been the big focus of the crypto advocates. (It’s also been the primary issue in the dozens of frivolous cases brought by Biden’s SEC.)2

• Back in 2017, all the industry wanted was for the SEC to set rules of the road for which tokens and coins would not be subject to its rules. That’s when the Digital Chamber formed its Token Alliance. (the current SEC chair actually helped to run that group, before he moved back into the big glass building).

• In 2018, the Chamber started a conversation around token taxonomy as it relates to securities regulation. This was also the year that William Hinman gave his famous speech that started the whole conversation around “sufficient decentralization.”

• Obviously, that didn’t have the force of a rule, but it got folks hoping.

• The Blockchain Association kicked off that year, and it started pushing legislation. Again, it was about just this question: the Token Taxonomy Act.

• When we get to 2019, the Digital Chamber went before international securities regulators urging them not to think of all tokens and coins as securities. In other words, get some precedent going on this question globally, so the US could see it wouldn’t be a disaster to let some of these assets do their thing.

• Back then, it started to look like the SEC might be willing to play ball. It put out a discussion paper. The Blockchain Association wrote a critique. It almost seemed like the two sides were talking.

• But the big crypto policy firms started to look to lawmakers. The Digital Chamber submitted testimony before the Senate Banking Committee saying it might be necessary.

I bring up all this ancient history just to make the point that it wasn’t so long ago that agency action was the main thing industry advocates wanted to see. Once upon a time, that was enough.

And it circled back to this one big issue: Give startups a way to tell ahead of time whether or not their new digital asset will need the full securities law treatment or not.

But the Gensler trauma has left the crypto-glitterati scared. They want the Congress to hold them close and rock them through the night.

Thanks for reading Front Stage Exit! Subscribe for free to receive new posts and support my work.

Clarity is coming, even if Clarity stalls for good.

Prognosis: Next year, the SEC will set clear rules of the road for tokens and coins to operate in the world without ambiguity. Then the industry has a minimum of three years before even the most hostile SEC chair can roll that back (because you can’t kill a rule instantaneously — it takes a new rulemaking process).

By then, there will also be stablecoins in the wild, legally, from some of the biggest fintechs on earth.

By then, big banks will be brokering all kinds of crypto clients, including traditional institutions and the freshly crypto rich. There’s a decent chance tokenized equity will just be kinda normal by then.

Do you really think there’s a chance that a fully entrenched industry will be uprooted at that point?

Worst case scenario, the coins have become completely partisan and a new Democrat gets elected President, so he comes in looking to right the ship. In fact, by then, maybe it will be clear that this administration has been too laissez-faire. Could be!

But there won’t be another all-out assault on the big firms, like Uniswap, Coinbase, and Kraken.

Best that semi-hostile admin will manage is some tightening up of screws, perhaps more difficult approvals and maybe some AML/CFT stuff — just for funsies. But it won’t be able to pull the rocket back out of the moon. It will be lodged in there real good by then.

Yes, if the Clarity Act (or something similar) passed, that would give the industry certainty. But in terms of structuring the market, rulemaking will be enough for the industry to make considerable moves forward. And moving forward will mean growth. Not just growth in market cap, but in ways people in the real economy use these products.

That’s going to shrink the attack surface. Growth will grind up the last bit of political will to scapegoat blockchains and dump it in the Potomac where the catfish can eat it before the oysters shove it forever into the Chesapeake. Agency action will be enough to spur that growth.

So, yes, I don’t think it’s very likely that any of the market structure legislation gets passed in 2026.

But that won’t matter in the end.

XRP's consensus model truly blows my mind

Steelmanning the XRPLedger, the XRP coin and Ripple, three interrelated crypto projects that drive both mania and skepticism

https://www.frontstageexit.com

1 This part might actually be the most serious threat to the blockchain economy, but I’ll save that for a later dispatch.

2 As an aside, the New York Times put out an ill-informed story this weekend about the fact that Atkins has rolled back most of these cases. It’s pretty obvious that the reporters who wrote it don’t understand the core issue of securities designation — it takes them 31 paragraphs before they even get to it. They are just getting played by ex-Biden staffers airing their grievances. Many such cases.

Humans love fighting their last war.

The crypto lobbyists in Washington have been urgently pushing to pass Clarity, the crypto legislation that came out of the House strong, or something like it. Fresh law, the argument goes, would tie the hands of any incoming administration that might be hostile to the industry, like Biden was.

But there won’t ever be another administration like Biden’s. At this point, legislation doesn’t matter that much.

Another way to say this: Let Paul Atkins cook.

The current SEC Chair, Crypto Uncle Atkins, has said from the start that existing law is sufficient to regulate the cryptocurrency markets.

But all the attention has gone to Senators, who can’t seem to even get a committee vote pulled together, while SEC staff have held about a half-dozen hearings and are likely plugging away on draft rules as I write this.

Meanwhile, the Senate Banking Committee comms team emailed reporters yesterday afternoon to say that they were hoping to get a market structure measure before the committee in “early 2026.”

• womp, womp

• First it was September. Then it was Thanksgiving. Then it was by year’s end. Now? It’s early 2026.

Clarity? Down bad.

It’s fine, though.

Try this story on for size:

1. Next year, the SEC promulgates new rules around the issuance and trading of digital assets.

2. They issue a variety of cautions around the tokenization of equities as well, making it clear you can’t just do it willy-nilly.

3. By 2027 there are rules around equity tokenization, too.

4. Stablecoins trend up over this whole period — nothing dramatic goes wrong with the ones running under GENIUS.

5. By early 2028, we start to see more real-world asset tokenization kick in. Property. Equities. Fixed income. Vehicles. Collectibles maybe take off.

6. These real-world asset tokens begin to get deployed in some regulated DeFi products, which cracks open a bit of new, somewhat stable looking yield.

7. This causes a general bullish sentiment to kick in, such that it won’t matter much if a Republican or Democrat turns out to be the next President.

8. WAGMI.

And all of those pieces are possible with nothing but action from the SEC and aligned actions by the CFTC.

If DC gives US citizens a way to freely trade cryptocurrencies, create new ones and some modest ways to plug these networks into the real world, that’s a recipe for growth. It’s probably a recipe for a fresh boom,1 but I don’t want to overstate it. There are those who believe I am quite wrong about this.

That story doesn’t sound like much of a stretch to me.

Other DC authorities are giving the industry a greenlight to actually interact with the real economy.

The Office of the Comptroller of the Currency (OCC), one of the three prudential banking regulators in the US, approved five banks as trusts last week, which will allow them to run stablecoins under the GENIUS Act, the stablecoin law that did get passed this year.

The OCC also cleared regular banks to engage in riskless activity with cryptocurrencies. While I frankly think it’s weird they even have to ask permission to do this, it means that they can start offering a lot more basic financial services to companies in this space, such as brokering basic crypto trades.

This obviously opens up the crypto market to a lot of companies who aren’t up for diligencing any new counterparties for their market activities. But if their existing bank can broker? They might trade some coin.

And then the Commodity Futures Trading Commission (CFTC) is tentatively letting traders on its exchanges post a few blue-chip cryptocurrencies as collateral to back their positions. And it’s letting Polymarket come back.

The Trump administration rolled out an aggressive plan to give the legal, upstanding end of the crypto industry access to the same financial tools other legal companies have. And it’s happening.

But while the suits in DC are chugging forward, the guys in hoodies fret about the past.

Roll back the tape

Let’s look back in time.

The main problem for the industry so far has been sorting out which digital assets are securities and which ones are not.

Folks have been loath to talk about this too explicitly, but here’s the deal: If all (or most) cryptocurrencies were securities they would become basically useless.

• Private securities can only be held by so-called “accredited investors.” Basically, wealthy people.

• And they can only be traded on a regulated securities exchange, which shuts down all sorts of use cases, like NFT-gated events, Filecoin nodes, DePIN bandwidth sharing and liquidity provision on Uniswap.

• All usage of these assets would be nixed because the only way they could be held and traded would be trapped on exchanges, within a framework that presumes that trading is really the only thing a person can do with securities.

But it is perfectly within the SEC’s authority to create some guidelines here, and every indication suggests that that is just what SEC staff is working on.

That’s why, when you look at history, this issue of how to characterize tokens and coins has been the big focus of the crypto advocates. (It’s also been the primary issue in the dozens of frivolous cases brought by Biden’s SEC.)2

• Back in 2017, all the industry wanted was for the SEC to set rules of the road for which tokens and coins would not be subject to its rules. That’s when the Digital Chamber formed its Token Alliance. (the current SEC chair actually helped to run that group, before he moved back into the big glass building).

• In 2018, the Chamber started a conversation around token taxonomy as it relates to securities regulation. This was also the year that William Hinman gave his famous speech that started the whole conversation around “sufficient decentralization.”

• Obviously, that didn’t have the force of a rule, but it got folks hoping.

• The Blockchain Association kicked off that year, and it started pushing legislation. Again, it was about just this question: the Token Taxonomy Act.

• When we get to 2019, the Digital Chamber went before international securities regulators urging them not to think of all tokens and coins as securities. In other words, get some precedent going on this question globally, so the US could see it wouldn’t be a disaster to let some of these assets do their thing.

• Back then, it started to look like the SEC might be willing to play ball. It put out a discussion paper. The Blockchain Association wrote a critique. It almost seemed like the two sides were talking.

• But the big crypto policy firms started to look to lawmakers. The Digital Chamber submitted testimony before the Senate Banking Committee saying it might be necessary.

I bring up all this ancient history just to make the point that it wasn’t so long ago that agency action was the main thing industry advocates wanted to see. Once upon a time, that was enough.

And it circled back to this one big issue: Give startups a way to tell ahead of time whether or not their new digital asset will need the full securities law treatment or not.

But the Gensler trauma has left the crypto-glitterati scared. They want the Congress to hold them close and rock them through the night.

Thanks for reading Front Stage Exit! Subscribe for free to receive new posts and support my work.

Clarity is coming, even if Clarity stalls for good.

Prognosis: Next year, the SEC will set clear rules of the road for tokens and coins to operate in the world without ambiguity. Then the industry has a minimum of three years before even the most hostile SEC chair can roll that back (because you can’t kill a rule instantaneously — it takes a new rulemaking process).

By then, there will also be stablecoins in the wild, legally, from some of the biggest fintechs on earth.

By then, big banks will be brokering all kinds of crypto clients, including traditional institutions and the freshly crypto rich. There’s a decent chance tokenized equity will just be kinda normal by then.

Do you really think there’s a chance that a fully entrenched industry will be uprooted at that point?

Worst case scenario, the coins have become completely partisan and a new Democrat gets elected President, so he comes in looking to right the ship. In fact, by then, maybe it will be clear that this administration has been too laissez-faire. Could be!

But there won’t be another all-out assault on the big firms, like Uniswap, Coinbase, and Kraken.

Best that semi-hostile admin will manage is some tightening up of screws, perhaps more difficult approvals and maybe some AML/CFT stuff — just for funsies. But it won’t be able to pull the rocket back out of the moon. It will be lodged in there real good by then.

Yes, if the Clarity Act (or something similar) passed, that would give the industry certainty. But in terms of structuring the market, rulemaking will be enough for the industry to make considerable moves forward. And moving forward will mean growth. Not just growth in market cap, but in ways people in the real economy use these products.

That’s going to shrink the attack surface. Growth will grind up the last bit of political will to scapegoat blockchains and dump it in the Potomac where the catfish can eat it before the oysters shove it forever into the Chesapeake. Agency action will be enough to spur that growth.

So, yes, I don’t think it’s very likely that any of the market structure legislation gets passed in 2026.

But that won’t matter in the end.

XRP's consensus model truly blows my mind

Steelmanning the XRPLedger, the XRP coin and Ripple, three interrelated crypto projects that drive both mania and skepticism

https://www.frontstageexit.com

1 This part might actually be the most serious threat to the blockchain economy, but I’ll save that for a later dispatch.

2 As an aside, the New York Times put out an ill-informed story this weekend about the fact that Atkins has rolled back most of these cases. It’s pretty obvious that the reporters who wrote it don’t understand the core issue of securities designation — it takes them 31 paragraphs before they even get to it. They are just getting played by ex-Biden staffers airing their grievances. Many such cases.