Welcome to another weekly letter (#29) from TheIntersection team.
In this issue:
- News: The UK Crypto regulatory countdown begins
- Data: Crypto Wealth Holds Up in 2026
- Analysis: CLARITY may be dead, but the questions it asked about DeFi won’t go away
- Our weekly events round-up
Before we dive in, one request: please forward this weekly letter to anyone you think might be interested. We also very much welcome feedback (and contributors). If you want to email us, just drop an email to us at teams@theintersection.news
News in Brief
Circle’s Arc blockchain goes live.Circle is moving Arc from testnet to public mainnet, bringing its blockchain built specifically for financial markets into production. Arc uses USDC as its native gas token and is designed for fast settlement, programmable finance and tokenised assets. The network has attracted founding validators including BlackRock, DTCC, Visa and Mastercard. Why it matters: Circle is positioning Arc as infrastructure for institutional finance, rather than simply another blockchain.
Broadridge launches infrastructure for tokenised markets. Broadridge has launched DLX, a platform designed to help financial institutions issue, trade, settle and manage digital assets. It builds on the firm's existing Distributed Ledger Repo platform, which Broadridge says already processes more than $350 billion in daily activity. Why it matters: The focus is shifting from proving that assets can be tokenised to building the infrastructure needed to run tokenised markets at scale.
Invesco moves into tokenised stablecoin reserves. Invesco is planning a tokenised reserve fund for stablecoin issuers, designed to hold assets such as cash and short-term U.S. Treasuries and make them available on-chain. Why it matters: As stablecoin regulation develops, the assets sitting behind the tokens are becoming a market in their own right, creating an opportunity for traditional asset managers.
Robinhood and AMC remain locked in tokenised-stock fight. The dispute between AMC and Robinhood over tokenised AMC shares is still escalating. Robinhood has rejected AMC’s demand to stop trading the tokens, keeping open questions around issuer consent, shareholder rights and securities registration. Why it matters: The dispute is becoming a live test of how tokenised equities should work, particularly when a token gives investors economic exposure to a company without necessarily giving them the rights attached to owning the underlying shares.
Deep Dive — The UK crypto regulation countdown begins
The top line. The UK’s new crypto regime is starting to take shape, with two important deadlines coming up this month. The Bank of England’s consultation on its Code of Practice for systemic sterling stablecoins closes on September 22, while the FCA’s new authorisation gateway opens on September 30. Firms will then have until February 2027 to apply, ahead of the full regime taking effect in October 2027.The FCA’s new rules will bring activities including stablecoin issuance, custody, trading platforms and dealing into the UK’s regulated financial-services framework.
For firms already operating in the UK, the message is fairly simple: being registered under the existing anti-money-laundering regime will not automatically mean they are authorised under the new system. They will need to apply for the relevant permissions. The bottom line: The October 2027 deadline might still look a long way off, but for firms that want to operate under the new regime, the clock is already running.
Crypto Wealth Holds Up in 2026 as Bitcoin Retreats from Record Highs
There are 135,694 crypto millionaires worldwide, each holding USD 1 million or more in digital assets — and 92,272 are Bitcoin millionaires — according to the Crypto Wealth Report 2026 released today by leading international residence and citizenship advisory specialists Henley & Partners. The global crypto market is now worth USD 2.6 trillion, of which USD 1.6 trillion is in Bitcoin (as of 31 August 2026). Bitcoin currently trades at roughly 38% below its October 2025 peak, recovering from its mid-year slump when it fell under 50%, and this has been the mildest of its major winters: the declines that followed the 2011, 2013, 2017, and 2021 peaks each cut its price by more than 75%.
Further up the crypto wealth pyramid are 290 centi-millionaires holding USD 100 million or more — 151 in Bitcoin alone — while at the apex are 23 crypto billionaires, 9 of them in Bitcoin. Some 742 million individuals now hold digital assets, with 371 million holding Bitcoin, showing that ownership continued to broaden even as the market contracted.
Comparing Crypto-Friendly Countries
The Henley Crypto Adoption Index 2026, a proprietary tool updated annually as part of the Crypto Wealth Report, benchmarks 36 countries offering residence and citizenship pathways, assessing how effectively they embrace and regulate crypto and blockchain. Drawing on more than 900 data points, the index provides a comparative view of the regulatory, tax, infrastructure, innovation, and adoption environments available to internationally mobile digital asset investors.
Singapore leads the index for the fourth consecutive year, holding the highest Innovation and Technology score overall. The UAE takes 2nd place, up from 5th last year, with 10 out of 10 for Tax-Friendliness and no tax on crypto trading, staking, or mining. Hong Kong is 3rd, with the strongest Infrastructure Adoption and Economic Factors scores in the index, and the USA is 4th, the only country to score a perfect 10 for Public Adoption. Switzerland completes the Top Five, scoring highly in Innovation and Technology and Economic Factors. Malta ranks 6th and holds the highest Regulatory Environment score in the index, with Thailand, the UK, Cyprus, and The Bahamas taking the remaining positions in the Top 10.
Newcomers to the Henley Crypto Adoption Index 2026 in 2026 include The Bahamas (10th), Cayman Islands (12th), Bahrain (13th), Argentina (26th), Maldives (31st), and Paraguay (35th). Bahrain’s strong debut reflects its broader positioning as a destination for international investors and the appeal of countries that combine highly competitive taxation environments with business-friendly fundamentals. H.E. Noor bint Ali Alkhulaif, Minister of Sustainable Development, Chief Executive of Bahrain Economic Development Board, says: “Bahrain’s performance reflects the strengths that continue to attract international investors and professionals to the island nation. Bahrain offers a trusted, agile, and competitive environment supported by forward-looking regulation, an innovative and sophisticated financial services ecosystem, and attractive long-term residency options, reinforcing its position as a leading destination for global wealth and investment.”
The sixth new entrant on the index this year is Naoero (32nd). Edward Clark, Chief Executive Officer at the Naoero Economic and Climate Resilience Citizenship Program, says: “Naoero was the first Pacific country to establish a dedicated digital asset regulator. The country did this because investors need to know the rules before they commit to anything. Alongside its citizenship program, that framework reflects a broader ambition to engage with international investors and participate in the rapidly evolving global digital economy.” Henley & Partners’ recently published Global Wealth Mobility Framework measures the broader conditions that attract and retain globally mobile wealth, including investor access, quality of life, and rule of law as well as tax competitiveness. Among the framework’s wealth mobility leaders, the UAE achieved a Wealth Mobility Competitiveness Score of 85.3 out of 100, with Singapore at 79.5, New Zealand at 75.8, the Cayman Islands at 74.3, and Cyprus at 73.5.
New Reporting Rules for Crypto Wealth
Seventy-six jurisdictions have signed up to the OECD’s reporting framework for crypto assets, with the first exchanges of information between 46 of them due in September 2027. As transparency increases and regulatory frameworks mature, the jurisdiction in which a crypto-wealth holder lives, invests, and structures their affairs is becoming increasingly consequential. Volek says this is reinforcing the importance of residence and citizenship planning for internationally mobile investors. “Crypto may move across borders with unprecedented ease, but its owners still need to decide which jurisdictions they want to be connected to. As reporting requirements increase and regulatory scrutiny intensifies, the focus shifts to quality: competent regulation, dependable courts, physical safety, global access, and a standard of life a family actually wants. For crypto-wealth holders, a well-structured sovereign portfolio — combining residence, citizenship, and jurisdictional options — can provide greater flexibility, access, and resilience over the long term.”
The complete Crypto Wealth Report 2026 is available online.
Now CLARITY is dead, what is the future of DeFi regulation?
The CLARITY Act is looking dead in the water, but the issues it set out to resolve aren’t going anywhere, as Lewis Rinaudo Cohen explains to the InterSection.
By John Gray
Back in April, when the InterSection unpacked the nuances and potential ramifications of CLARITY, we noted that the Act was hanging by a thread. That thread is about to snap. On September 15, the US Senate voted 49–50 on a procedural motion to advance the Digital Asset Market Clarity Act, short of the 60 votes required. Lawmakers note the failure was procedural, leaving a slim chance the bill could return during the post-election lame-duck session. This feels unlikely, though. Polymarket, a blockchain-based platform for trading on real-world events, currently puts the odds of CLARITY passing in 2026 below 5%, down from a high of 82% in February.
Nevertheless, the questions the Act asks and attempts to answer will not disappear. What, exactly, should count as decentralised finance? Where should regulatory responsibility begin and end? Is decentralisation even the right principle around which to draw that line? What does DeFi offer that TradFi cannot provide? These aren’t just legislative niceties. Rather, they go to the heart of what DeFi is now, and what it could become going forward. In this light, it seems like a good moment to stand back and take an expanded view of DeFi legislation. To do so, the InterSection spoke to someone who (arguably) knows more about the subject than anyone else: Lewis Rinaudo Cohen.
What counts as DeFi?
A prominent crypto-native lawyer, Cohen is Co-Chair of CahillNXT, the Digital Assets and Frontier Technologies practice of Wall Street law firm Cahill Gordon & Reindel. His recent article for Bloomberg Law, ‘Wave of Crypto Policymaking Means Lawyers Can Help Shape Rules’, co-authored with CahillNXT partner Sarah Chen, identifies the SEC’s definition of coordinated control as perhaps the most consequential piece of (prospective) rulemaking associated with CLARITY. In essence, the rule would help determine when a supposedly decentralised network remains sufficiently controlled by a coordinated group to stay within the SEC’s disclosure perimeter. But that raises a more fundamental question: can decentralisation ever be defined precisely enough to serve as a meaningful legal test?
Straight out of the gate, Cohen is optimistic about the potential of DeFi. “The concept of code deployed to a blockchain that operates itself, with users calling it when they want to, is extremely attractive. It presents an exciting alternative to traditional finance: it functionally removes intermediaries and lets the market operate in a very efficient way.” However, this vision of DeFi does not necessarily encapsulate the way many protocols actually operate. Admin keys, security councils and the ability to pause or roll back a project after an exploit all introduce some degree of human control. That makes the question facing lawmakers considerably more difficult than simply deciding whether something runs on a blockchain.
Cohen says the CLARITY Act’s drafters attempted to strike a balance between these competing realities. But as the bill evolved, he argues, there was less focus on getting the treatment of DeFi “exactly right”. In other words, the challenge for CLARITY was not simply to define DeFi, but to establish where decentralisation ends and regulatory responsibility begins. If CLARITY had made it through Congress, the SEC would have had to determine how its provisions applied in practice, potentially leaving some of the most consequential questions around the DeFi perimeter to the rulemaking process. Cohen sees this as a balancing act that is unlikely to be settled by the legislation alone.
“I think if DeFi is going to succeed, it’s important to recognise that what succeeds is a slightly different version of what was originally promoted. DeFi should, and always will, have a place, but an alternative way to think of this is as automation, particularly as we move into the world of AI. And I think with automation there is a greater level of responsibility. I think the DeFi community is trying to find that balance between responsibility, particularly at the front end, and the values, privacy and security that are essential to DeFi.”
Decentralisation may not be the right yardstick
In that regard, and with the distinction between DeFi and TradFi becoming increasingly blurred, can decentralisation ever be defined precisely enough to serve as a legal dividing line? For Cohen, the issue is not that decentralisation is meaningless. Rather, it describes something different from the questions regulators are trying to answer.
“Decentralisation is a hugely important concept for users as a principle, as a philosophy. It’s just not a great legal perimeter. It’s highly amorphous. It’s very technology-centric.” An awareness of this mismatch is already beginning to emerge in the SEC’s approach. Cohen points to the commission’s recent proposal for crypto asset regulation, which deliberately avoids taking decentralisation as the basis for defining the securities perimeter. He had argued for precisely this approach in a submission to the SEC’s crypto task force, ‘What We Talk About When We Talk About (Tokens)’, which the proposal cites extensively.
Investor protection for token holders and user protection for DeFi participants are not necessarily the same thing, and the characteristics of a token as an investment cannot be inferred solely from how decentralised the underlying protocol is. This becomes particularly apparent when considering what actually drives the value of many crypto tokens.
The conventional argument is that greater demand for a protocol creates greater demand for its token, making the token a measure of the protocol’s success. But, Cohen argues, that demand is often generated by the people building and improving the protocol, something particularly at issue with a decentralized application, or dApp, that must compete in the market for users. If the team behind a project walks away, the protocol may simply atrophy and die, taking the value of the associated token down with it – something seen increasingly regularly over the last few months. In other words, the existence of bona fide decentralised infrastructure that is not subject to “coordinated control” does not necessarily mean that the value of the related token is not highly reliant on the contributions of a single development company or team.
Cohen draws a further distinction between the decentralisation of a protocol and the experience of the person using it.“It’s different from decentralisation in the sense of: does someone have access to your private keys? The economic risk to a token holder and the ability of a user to have complete control over their assets are two different concepts, and they’re two different concerns. What is the value of holding this token; and, as a user, how disintermediated am I from others?”
This is a useful complication to a debate that can otherwise tend towards the binary. A protocol can reduce intermediaries for its users while still depending heavily on identifiable teams, while a token can function primarily as an investment regardless of the decentralised architecture sitting underneath it. For regulators, treating all of these characteristics as one question of “decentralisation” risks obscuring the distinctions that regulation is nominally supposed to address.
Lawmakers cannot manufacture demand for DeFi
A broader question is whether regulatory certainty would genuinely make it easier for DeFi to thrive in the US, or whether the rulemaking process could simply create another category of friction. “The amount of economic activity around governance tokens and true crypto assets is modest. What DeFi needs to succeed is people believing that there’s growth in the sector, that it’s worth someone taking the next year of his or her life to work on a protocol.”
For DeFi to attract developers, entrepreneurs and capital, there has to be a compelling reason to believe that the ecosystem will be more valuable tomorrow than it is today. And, in Cohen’s view, that increasingly means finding applications beyond the existing crypto-native economy. AI is already competing with DeFi for both financial and human capital, he argues, making it harder for the sector to sustain the excitement and investment needed to build new products. The opportunity instead lies in the crossover between DeFi’s technological infrastructure and the much larger pool of traditional financial assets, particularly through the tokenisation of so-called “real-world assets”.
“The larger success and growth of DeFi either stands or falls on the crossover between the scale of real financial assets and the tooling of DeFi. But that inherently involves compromises that are not purely regulatory in nature. There are a lot of practical business and other concerns if you’re putting real-world assets, securities of various types, equity or debt into this gear.”
Regulation could give institutional players the confidence to bring real-world assets onto blockchain-based infrastructure, without stepping outside an acceptable regulatory framework. But that would come with a trade-off. Tokenizing real financial assets inevitably introduces requirements and expectations that sit somewhat uneasily with the sector’s original ideals of autonomy and disintermediation. For Cohen, however, those compromises may be necessary if DeFi is to move beyond its current ecosystem.
“If we just stay where we are, there is a real risk of longer-term atrophy, and that’s not primarily because of regulation. It’s a question of people’s attention.” He notes that protocols and platforms are shutting down. “You might say: ‘I thought this protocol was immutable. What do you mean it’s shutting down?’ But, of course, we know what it means. It means the team gave up and left.”
That is an uncomfortable realisation for DeFi. Its resilience cannot be measured only by whether code remains deployed on a blockchain. If the people building, maintaining and developing that code lose interest, the ecosystem might wither. Cohen remains convinced that DeFi has something valuable to offer. The challenge, he suggests, is for the industry to be more candid about what it really is.
“It’s a really complicated thing, but it’s an important and exciting thing. And I do believe DeFi will succeed because it offers something different. Despite my realism, I’m absolutely bullish and excited about this space. I am just sometimes frustrated because I think the whole space, and many in the community, overpromise what it can deliver, and undersell what its true benefits are. I think we just have to be a good bit more honest as to what it can and can’t do.”
