What the Failed Clarity Act Would Have Done, and What’s Filling the Gap

The Digital Asset Market Clarity Act aimed to finally define different categories of cryptocurrencies and clarify which federal agencies hold authority over them, ending years of ambiguity that fueled conflicts between crypto companies and regulators. The bill would have significantly expanded the Commodity Futures Trading Commission’s authority, giving it direct oversight of crypto spot markets, where the majority of crypto trading actually occurs.

This regulatory confusion stems from the US having separate securities and derivatives regulators, unlike many other countries with unified oversight. The bill also included measures targeting illicit finance and offered legal protections for software developers building decentralized finance tools.

Agencies Move Quickly to Fill the Void

With the bill now stalled in the Senate, both the SEC and CFTC have moved swiftly to advance similar goals through their existing authority. The SEC’s chairman, appointed by the current administration, has prioritized digital asset policy since taking office and pushed forward major initiatives just days after the bill’s failure, including a framework for tokenized securities.

Multiple Regulatory Efforts Underway

The SEC has proposed several formal rules, including a framework for crypto fundraising, a technical rule allowing blockchain records to serve as official ownership documentation, and a forthcoming rule on digital asset custody for investment advisers. Policy analysts note that Republican leadership at both agencies can now advance these proposals without needing Democratic support.

Meanwhile, the CFTC has similarly pushed forward, submitting its own crypto market regulatory proposal for White House review and exploring a new framework allowing certain firms to operate as designated crypto asset markets.

Durability Remains a Key Question

Despite this progress, these agency-level rules lack the permanence of actual legislation and could be reversed by future leadership changes or challenged in court since they aren’t grounded in law. The SEC’s chairman has repeatedly emphasized that only congressional action can create truly lasting, “future-proofed” regulation, even as his agency continues building interim solutions in Congress’s absence.