By Hyunsu Jung
One of the major obstacles to institutional adoption of cryptocurrency in the United States is the absence of a clear, unified regulatory framework for trading markets.
Unlike traditional financial markets, crypto regulation remains fragmented across multiple federal agencies, each overseeing different aspects of the ecosystem. U.S. crypto exchanges must also navigate a patchwork of state-level money transmitter licensing requirements, creating additional complexity and compliance burdens.
At the federal level, the Commodity Futures Trading Commission (CFTC) maintains limited anti-fraud and anti-manipulation authority over spot crypto markets. However, it lacks comprehensive oversight of core market functions, including order handling, customer asset segregation, trade settlement and market surveillance.
This regulatory uncertainty has been a significant barrier for institutions that operate under strict compliance and fiduciary obligations. Pension funds, insurance companies and registered investment advisers have largely remained on the sidelines of both cryptocurrency markets and the broader ecosystem of decentralized finance (DeFi), despite growing interest in digital assets.
With the Senate’s proposed changes to the Digital Asset Market Clarity Act there is a light at the end of the tunnel: a combination of solutions that remove structural barriers for institutional participation in spot and derivatives-based crypto trading.
The key changes include:
Clarifying the securities boundary: The SEC and CFTC’s March 2026 joint interpretation established a five-category taxonomy and clarified when a token is, or ceases to be, subject to an investment contract under Howey.
A cleaner asset taxonomy: The Senate bill defines a new category of “ancillary assets” and creates a rebuttable presumption that network tokens fall within it, while establishing “Regulation Crypto”, an exemption from full SEC registration that lets token issuers raise capital from everyday investors through a defined, compliant path.
Strengthening anti-money-laundering integration: The Senate version ties digital asset intermediaries directly into the Bank Secrecy Act and expands Treasury’s special-measures authority, establishing a framework credible to the compliance officers that green light the flow of institutional capital.
Adding explicit DeFi and developer protections. Validators, node operators, and non-custodial software developers are excluded from intermediary registration, the first statutory safe harbor for on-chain infrastructure in U.S. law.
Restricting stablecoin yield: Platforms cannot pay interest on idle stablecoin balances, though activity-linked rewards survive. While many market participants view this restriction as a limitation, it may also encourage innovation around alternative forms of on-chain capital deployment, including vault structures and private lending pools that emphasize active utilization rather than passive stablecoin balances.
Together these changes address key structural barriers: establishing a clear federal venue, bank custody, fifty-state licensing, defining undefined assets and protecting on-chain products and their users. These implementations are critical and if passed, will enable the largest expansion of crypto trading in US history.
Legal venues come into existence: Title IV of the bill creates federal registration for Digital Commodity Exchanges, brokers, and dealers under exclusive CFTC jurisdiction, with mandatory customer asset segregation. For the first time, a U.S. spot crypto venue can be a federally registered entity with the category of oversight that institutional compliance frameworks require.
Banks can hold the assets: The bill grants banks explicit authority to custody digital assets. Institutional trading at scale requires prime brokerage infrastructure: qualified custody, segregation, financing. Bank custody authority is the prerequisite for that entire stack to exist domestically rather than offshore.
Fifty regimes merge into one: Federal preemption of state securities registration means a registered venue operates under a single national framework instead of fifty state ones, dramatically reducing the cost and time of scaling U.S. trading operations.
Greater clarity around asset classification: Regulators have already begun the classification work: a joint SEC-CFTC interpretation has explicitly named more than a dozen crypto assets as digital commodities and placed staking, mining, and airdrops outside securities law.
The provisional window: Firms that register during the initial 180-day provisional window can operate while the CFTC finalizes its rules. Capacity comes online quickly and makes the expansion of digital assets, products and services readily available for access.
As of June 23, 2026, the Digital Asset Market Clarity Act has passed the House (294-134, July 2025) and cleared the Senate Banking Committee (15-9, May 14, 2026). It is not yet law. Before enactment, the Senate Banking and Senate Agriculture Committee versions must be reconciled, the merged bill must clear a 60-vote threshold on the Senate floor, that version must be reconciled with the House-passed bill, and the result must be signed by the President. Several contested provisions including stablecoin yield treatment, DeFi illicit-finance controls, and ethics language, remain unresolved, and the November 2026 midterms create a meaningful deadline against which this must move.
The scale of the opportunity underscores why this legislation matters. Tens of trillions of dollars are managed by institutions that today face significant regulatory and compliance barriers to direct crypto exposure. Even modest allocation shifts from this capital base could have a meaningful impact on digital asset markets.
More importantly, this is not speculative capital waiting for higher prices. It is institutional capital waiting for regulatory certainty. Recent market outflows tied to regulatory uncertainty demonstrate that compliance concerns, not investment appetite, remain one of the largest constraints on adoption.
If passed, a clear federal framework could reverse a decade-long trend of crypto activity moving offshore. In the absence of clear U.S. rules, exchanges, market makers, developers and liquidity providers established operations in jurisdictions that moved faster to provide regulatory clarity. A credible federal regime would create a pathway for that activity to return.
The result would be more than an influx of new capital. It would be the re-domiciling of existing global crypto activity into U.S.-regulated infrastructure, strengthening America’s position in the next generation of financial markets.
As regulated digital assets become integrated into institutional balance sheets, the next phase of growth is likely to occur on-chain. Permissioned lending pools, tokenized vaults and other institutional-grade DeFi infrastructure will give firms new ways to deploy capital while maintaining compliance and risk controls.
That transition is already underway. Money market funds, fixed-income instruments and other real-world assets (RWAs) are increasingly being deployed on networks such as Ethereum, Solana and Hyperliquid. As these assets become accepted forms of on-chain collateral, they will support new lending, financing and liquidity opportunities, accelerating the broader trend toward tokenization.
Over time, the distinction between traditional finance and digital asset markets may become increasingly difficult to define. Realizing that future will require more than technological innovation. It will require regulatory clarity, trusted market infrastructure and the institutional confidence to participate at scale. The Digital Asset Market Clarity Act has the potential to provide all three.
About the Author
Hyunsu Jung is the CEO of Hyperion DeFi leading the company’s treasury strategy, DeFi integrations and overall corporate direction. He previously served as a Portfolio Manager at DARMA Capital, a CFTC- and NFA-registered digital asset manager.