Jefferies, a Wall Street investment bank, said growing blockchain infrastructure and gradual regulatory progress are laying the groundwork for a new wave of tokenization of institutions in traditional finance (TradFi). Wide adoption, however, depends on clear rules for US market structures, it says.
The bank pointed to the draft Digital Asset Market Clarity Act as the most detailed plan yet for how blockchain-based financial infrastructure could evolve, although hurdles remain.
“While passage remains uncertain, implications across FIs, blockchain natives and tokens may emerge sooner than expected,” analysts led by Andrew Moss wrote in the Sunday report.
Tokenization is the process by which real-world assets are converted into blockchain-based tokens.
The Senate Agriculture Committee postponed its hearing on marking up the crypto market structure from Tuesday to Thursday, citing the winter storm that hit much of the United States over the weekend.
The analysts noted that the Senate Banking Committee released its version of the CLARITY Act on Jan. 12, based on the House bill passed last July. Industry response has been largely positive, the report said, but political headwinds remain after a planned markup was postponed amid the industry’s downturn.
A separate bill before the Senate Agriculture Committee still needs to be reconciled, and final approval requires a full Senate vote and the president’s sign-off. The report highlighted that on the prediction market Polymarket, the odds of passage in 2026 have fallen sharply.
According to the bank’s analysts, the bill would mark a break from “regulation through enforcement,” aiming instead to harmonize agency oversight through a technology-neutral framework covering asset classification, regulatory jurisdiction, financial institutions’ activities, decentralized finance oversight (DeFi), tokenization, and consumer protection.
Stablecoins have attracted a lot of attention. The analysts said the Senate draft would close the so-called “stablecoin yield loophole” by banning rewards paid solely for holding stablecoins, while still allowing transaction-based incentives.
Jefferies argued that the larger impact of CLARITY would be to unlock broader participation by regulated financial institutions. Tokenization efforts are already accelerating, it said, citing initiatives by the NYSE, Nasdaq, DTCC and Swift.
Clear market structure rules could accelerate blockchain-based trading, lending and custody, move capital towards TradFi-led projects and strengthen regulatory moats for compliant crypto-native firms, it said.
Many of these initiatives will rely on specific blockchains for settlement, creating potential upside for tokens tied to monetized network activity, the report added.
Benchmark, a brokerage, said the absence of legislation would delay, rather than undermine, crypto’s maturation, limiting the US market as capital flows towards bitcoin-linked exposure, balance sheet strength and cash flow infrastructure and away from regulatory sensitive segments including exchanges, DeFi and altcoins.
Read more: Delayed market structure that has seen a cap on US crypto valuations, says Benchmark
