Jefferies sees market structure bill as tokenization inflection point, despite rocky path ahead

Jefferies, a Wall Street investment bank, said maturing blockchain infrastructure and incremental regulatory progress are laying the groundwork for a new wave of tokenization by institutions in traditional finance (TradFi). Broad adoption, however, depends on having clear U.S. market structure rules, it said.

The bank pointed to the draft Digital Asset Market Clarity Act as the most detailed blueprint yet for how blockchain-based financial infrastructure could develop, even though hurdles remain in its path.

“Although passage remains uncertain, implications across FIs, blockchain-natives, and tokens may emerge sooner than anticipated,” wrote analysts led by Andrew Moss, 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 crypto market structure markup hearing from Tuesday to Thursday, citing the winter storm that hit much of the U.S. over the weekend.

The analysts noted that the Senate Banking Committee released its version of the CLARITY Act on Jan. 12, building on the House bill passed last July. Industry reaction has been largely positive, the report said, but political headwinds remain after a planned markup was postponed amid industry pushback.

A separate Senate Agriculture Committee bill must still be reconciled, and final approval requires a full Senate vote and presidential sign-off. The report highlighted that on prediction market Polymarket the odds for passage in 2026 have dropped 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 institution activities, decentralized finance (DeFi) oversight, tokenization and consumer protections.

Stablecoins have drawn outsized 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 the bigger impact of CLARITY would be unlocking broader participation by regulated financial institutions. Tokenization efforts are already accelerating, it said, citing initiatives from NYSE, Nasdaq, DTCC and Swift.

Clear market-structure rules could accelerate blockchain-based trading, lending and custody, shift capital toward 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 revenue-generating network activity, the report added.

Benchmark, a broker, said the absence of legislation would postpone, rather than undermine, crypto’s maturation, constraining the U.S. market as capital flows toward bitcoin-linked exposure, balance-sheet strength and cash-flowing infrastructure, and away from regulatory-sensitive segments including exchanges, DeFi and altcoins.

Read more: Market structure bill delay seen capping U.S. crypto valuations, Benchmark says