The Daily: The SEC just cleared the way for onchain stock trading, and more

The following article is adapted from The Block’s newsletter, The Daily, which comes out on weekday afternoons.

Happy Thursday! Crypto markets have absorbed the failed Clarity Act vote and a Federal Reserve rate hike without a deeper selloff, with analysts at LMAX Group, Nansen, and Wintermute noting the resilient price action but warning fresh catalysts are needed.

In today's newsletter, the SEC releases its long-awaited innovation exemption, the CFTC follows with a developer-friendly no-action position, Sen. Gillibrand says Democrats are still committed to passing the Clarity Act, and more.

Meanwhile, Bitwise CIO Matt Hougan revises his Clarity Act outlook, saying the crypto bull market may continue without legislation.

P.S. Don't forget to catch The Starting Block live at day two of the Avalanche Summit in New York!

SEC releases long-awaited innovation exemption to 'bring America's capital markets into the digital age'

The SEC released its long-awaited "innovation exemption" on Thursday, positioning it as a direct response to the Senate's failure to advance the Clarity Act.

• Chair Paul Atkins said the measure will "bring America's capital markets into the digital age" by allowing onchain trading of certain tokenized stocks.
• The five-year exemption takes effect immediately, with a comment period open and more permanent rulemaking to follow.
• It exempts certain "tokenized securities venues" from being classified as exchanges, and specific liquidity providers from dealer rules when they trade or provide liquidity through automated market makers.
• The exemption does not include synthetics (that replicate the price of an asset without directly owning it), requires venues to comply with sanctions rules, and lets issuers block their securities from trading on a venue.
• The move caps a busy stretch for the agency's "Project Crypto" push, with CFTC Chair Michael Selig also saying his agency is "locked in and ready to ship" its own rules.

Regulators keep moving on crypto: CFTC follows SEC with developer-friendly no-action stance

The CFTC issued a "no-action position" for software developers, saying it won't recommend enforcement against them for not registering as introducing brokers if they meet certain conditions.

• The move expands the agency's earlier Phantom no-action letter into a broader framework any software provider can build around, and a footnote suggests it could reach beyond "crypto asset-related software."
• It came just hours after the SEC's "innovation exemption," with both agencies pressing ahead on their own crypto agendas after the Senate's Clarity Act vote failed.
• Industry figures cheered the clarity but cautioned that no-action letters can be undone by a future administration, unlike the permanence legislation would have offered.

'Not the end': Sen. Gillibrand says Democrats still committed to passing Clarity Act

Seven Senate Democrats, led by Kirsten Gillibrand, said they remain committed to passing the Clarity Act, calling this week's failure "a setback, but not the end."

• The seven signatories had all voted no on Tuesday's procedural vote, which fell short at 49 of the 60 votes needed.
• However, the Democrats said they've worked for two years toward crypto legislation with "strong, commonsense ethics provisions" and pledged to continue pushing for a bipartisan deal.
• Analysts remain skeptical, with StoneX calling the bill "dead" for this Congress and Bernstein and JPMorgan now expecting the SEC and CFTC to fill the gap through their own rulemaking.

House committee moves to codify Trump's Strategic Bitcoin Reserve

The House Financial Services Committee advanced a bill to codify President Trump's Strategic Bitcoin Reserve, directing the Treasury to maintain a "secure bitcoin storage facility."

• The American Reserve Modernization Act, an evolution of the earlier BITCOIN Act from Rep. Nick Begich and Sen. Cynthia Lummis, would allow the government to acquire more bitcoin over five years using "budget-neutral strategies."
• Trump signed an executive order to establish the reserve in 2025, funded mainly by bitcoin the government already holds through forfeitures, though questions have since arisen over whether Treasury can legally manage it.
• Some opposed the bill, with Rep. Bill Foster arguing bitcoin is too risky and volatile and that "I don't think anyone believes that bitcoin is critical to the U.S. economy."

Grayscale's Pandl still sees bitcoin's $58K low as the bottom, gives clients 'green light'

Grayscale's head of research Zach Pandl said bitcoin's roughly $58,000 low around June 30 is still his call for the bottom of the bear phase, and the firm is now giving clients a "green light" to allocate to crypto.

• His call echoes Coinbase CEO Brian Armstrong, who said last week the foremost cryptocurrency had likely bottomed for the cycle, with bitcoin now trading above $76,000 but still about 39% below its $126,000 record.
• Pandl also made the case for Zcash, arguing digital currencies need a privacy layer bitcoin lacks, and that the privacy angle grows more relevant as AI gets more powerful.

In the next 24 hours

• U.S. FOMC member Michelle Bowman will speak at 9:30 a.m. on Friday.
• Bubblemaps and Wormhole are among the crypto projects set for token unlocks.
• UN Blockchain Week continues.

Reader poll

With the Fed hike behind us, what's the bigger weight on crypto now?

CLARITY ACT FALLOUT

MORE FED HIKES AHEAD

One click records your pick. We'll share the result in a later edition.

*58% of respondents in last Thursday's poll agreed with Brian Armstrong that bitcoin has bottomed for this cycle.

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