All Congress is still trying to work out the kinks on the clarity.
The regulatory agencies are moving ahead on emerging D5 themes.
CFTC chair Mike Selig filed a legal brief this week to assert his agency's authority over prediction markets.
He's vowing to fight any states that want to crack down on them, and the SEC is also moving forward on tokenization.
It's updated guidance on tokenized securities aims to help firms comply and seek approvals, and both agencies are also working.
Together they have relaunched Project Crypto to better prepare US markets for the digital era.
Well joining me this morning is Kristen Smith, president of the Salana Policy Institute.
Good morning, Kristen.
Thank you so much for joining us.
Well, the White House has now met twice to try and hammer out a deal between crypto and banking leaders, and Scott Bess, the Treasury Secretary, does think market structure legislation will be passed in the spring.
So where does the clarity Act stand based on your perspective?
Well, there are certainly a lot of conversations going on in Washington on the Clarity Act right now.
I think what I have been most impressed by is the fact that we have such high level leadership involved in what is traditionally sort of a maybe congressional committee level activity, you know, you have the White House convening stakeholders, the banks and crypto who have a disagreement over the yield issue.
You also have the Treasury Secretary weighing in about.
The state of the negotiations and you know we've heard reports that Senator Chuck Schumer, who is the Democratic leader in the Senate, is out talking to his members urging them to get something done.
So the fact that everyone on both sides of the aisle and across town from Congress to the White House really want to seem to get this done, I think is very hopeful.
I would say though this is an incredibly complex piece of legislation and it does take time, I think, from For some outside observers, it seems like this process has sort of stalled or slowed.
I worked on Capitol Hill for 10 years.
I'm telling you this is very normal.
It takes a while to work these things, especially when you're doing legislation at this scale.
So progress continues.
The meetings sort of behind the scenes and then the negotiations continue, and I'm optimistic that we will be able to get to the next sort of committee stage sometime this spring and hopefully get the bill then onto the Senate floor for a final vote.
And Kristen, as you mentioned, a lot of conversations are taking place at gatherings across the nation, but I do want to get your take on Project Crypto.
So the SEC and CFTC have relaunched Project Crypto.
So give us an overview and also tell us what you think this means for the industry.
Yeah, no, I think this is a very bullish effort.
So Project Crypto was originally an SEC effort to review the authorities that they already have and put out guidance that provides some regulatory certainty and clarity for the industry.
This doesn't rely on having a new law.
It's with the authority they already have.
And the good news is when Mike Selig, who was finally confirmed to chair the Commodity Futures Trading Commission or the CFTC, which would have a portion over the spot markets, Um, they have expanded Project Crypto to be a joint industry effort.
So I know Remi, we've talked about the agency trying to harmonize laws and regulations, and this is another example of that effort.
And so what this means is that as Congress is continuing to work through the legislative process, the SEC and the CFTC are going to use the authority they have to.
Provide additional guidance.
I thought that the speech that Chair Atkins from the SEC gave along with Commissioner Hester Purse at East Denver yesterday was incredibly telling.
You know, they sort of laid out their plan.
You can tell they're being very methodical about how they go about these regulations.
What they don't want to do is overstep their authority or do something.
Thing where an exemption or a rulemaking would violate the Administrative Procedure Act, so they're being very, very careful to do it correctly, but they are moving forward sort of with or without Congress, and I think, you know, that should have the effect of making the job Congress has to do easier because they're able to move on some of the portions without congressional authority.
Yeah, and before we move away from Project Crypto, can you tell us a little bit about the potential innovation exemptions you see from this?
Yeah, so I think the one that would be most exciting, particularly for where you literally sit right now, is an innovation around the trading of tokenized securities.
You know, there are a lot of efforts and issuers who have gone about trying to tokenize securities today.
It's actually quite easy to issue a security on a blockchain or to create some sort of instrument that looks similar to a security.
The challenge is the trading of those securities.
Those rules and regulations are very prescriptive to sort of the current way, and so we would be very excited to see the ability to use tokenized securities as part of DFI, for example, maybe as collateral for a loan or something of that nature.
And so, What we're hoping is that in what Chair Atkins spoke about yesterday is that there's going to be an innovation exemption that they're working towards that allows for the trading of tokenized securities, and while they sort of study and look at that innovation exemption, which would be time limited, they will write more long term prescriptive rules in a formal rulemaking process to Finalize what that would look like.
So I think that could really make the way we trade securities today much more efficient, much more low cost, allow more people to come in and raise capital because of it, um, but it will also lead to new innovative products where you can use your tokenized securities as collateral or engage in other DFI activities, um, because of the tokenized nature of that asset.
And here on Wall Street, another thing that we've been paying attention to is broader market volatility.
So we've been seeing not just crypto volatility, but across all asset classes, volatility has been the name of the game for 2026.
But tell us your perspective on the market volatility we've been seeing in digital assets this year and how it's been impacting the industry.
Yeah, you know, it's, it's really interesting because oftentimes, and I've been through many downturns in crypto, um, in my career, um, oftentimes there's sort of a specific source or cause of that, um, you know, this is a situation where it seems to be a confluence of many different factors, some of those, uh, macro, some of those crypto-specific, um, and I think what we're, what we're seeing though in the background is that the fundamentals. are very strong right now.
We're seeing a lot of institutional interest in crypto assets.
We're seeing Wall Street interested in adopting crypto technology.
We're seeing the rise of agentic finance where AI agents are are using crypto.
And so I think there's a lot to be excited about right now and that, you know, the market will work its way through this, and I think ultimately should turn around sometime in the months ahead.
Well, Kristen, a lot to keep our eyes on as we head into the rest of Q1 of 2026.
So as always, thank you so much for joining us and thank you so much for sharing all of your insights and your perspective.
Thanks Remy.
