With the Digital Asset Market Clarity Act stalled, U.S. regulators have moved quickly to fill the gap with agency rulemaking. According to CoinDesk, the Securities and Exchange Commission and the Commodity Futures Trading Commission are both advancing crypto policy projects, though neither agency can offer the same permanence that legislation would have provided.
SEC Chair Paul Atkins has repeatedly said his agency needed a law behind its work, and that law never arrived. The failure of Clarity was widely seen as a setback for the crypto sector, but the bill itself was meant to do something specific: define different categories of cryptocurrencies and related assets, then spell out which regulator had authority over each one.
What the Clarity Act was designed to do
The Digital Asset Market Clarity Act was the latest congressional version of an idea that has circulated for years. Its central purpose was to sort blockchain-native assets into distinct buckets and assign oversight accordingly.
For much of crypto’s history in the U.S., the industry fought with agencies such as the SEC over what platforms including Coinbase and Kraken were allowed to do, and whether issuing a crypto asset was legally the same as issuing a security. Those disputes led to enforcement actions, costly settlements and prolonged conflict, much of it during former SEC Chair Gary Gensler’s tenure.
Under the bill, the CFTC would also have gained new powers, most notably full supervisory authority over crypto commodity spot markets. Spot markets are where commodities trade directly. Once bitcoin and ether were ultimately treated as commodities, it became clear that much of crypto trading was taking place in a part of the market without a hands-on regulator, except in cases involving misconduct such as market manipulation.
CoinDesk noted that this split is distinctly American. The U.S. maintains separate agencies for securities and derivatives oversight, unlike jurisdictions that use a more unified model. That has made the question of who regulates which asset a recurring problem from the start.
Beyond classification and jurisdiction, the bill also included provisions aimed at curbing illicit finance. In one of its more contested sections, it sought to give DeFi software developers limited legal protections so they would not be prosecuted for how other people used their code.
The SEC moved first after the bill failed
CoinDesk did not dwell on the provisions that ultimately sank the bill. Instead, the report focused on what now fills the policy vacuum left behind. The first major example is the SEC.
The agency is now led by Paul Atkins, described in the report as a crypto-friendly pick of President Donald Trump. Atkins began his tenure with digital asset policy high on the agenda. Once Clarity fizzled, he moved to build as much of a replacement framework as the SEC could assemble on its own.
Two days after the bill failed, Atkins pushed ahead with a major policy initiative aimed at creating a legitimate place in U.S. regulation for tokenized securities. CoinDesk described tokenization as a centerpiece of the SEC’s new crypto focus. That initiative was only one part of a broader agenda.
Before that, Atkins and CFTC Chair Mike Selig — a former crypto-focused official at Atkins’ SEC — had already launched a joint digital assets effort. They began with standards for how different assets would be treated, a framework referred to as a “taxonomy.” CoinDesk said these staff-level projects have given the industry some clarity, but they are not especially durable because future agency leadership could rewrite them.
Formal SEC initiatives now underway
Atkins has also started several more formal efforts:
- Last month, the SEC proposed its first major crypto rule, which would create Regulation Crypto Assets, a framework for raising funds through crypto offerings without automatically triggering regulatory demands.
- Last week, the agency proposed a technical but significant rule that would allow blockchain data to serve officially as a record of ownership.
- The SEC is also nearing a proposed rule on how investment advisers should keep custody of digital assets.
Capital Alpha policy analyst Ian Katz said the SEC and CFTC can now “shift into overdrive with aggressive, pro-industry proposals.” In a note to clients after Clarity failed, he wrote: “The Republican leadership at those agencies will be able to pass regulations without Democratic approval. Some of those proposals may come with an implied message to Democrats amounting to: This is what you get when you don’t legislate.”
CoinDesk reported that the SEC’s formal crypto rules are being driven by an all-Republican commission, with two Democratic vacancies left open by the White House. That means reversing those rules under a future leadership — specifically, a commission appointed by a future Democratic president — would take meaningful effort. Even so, those rules would still be less durable than statutory law.
Atkins said the SEC’s latest high-profile move on tokenization is meant to function as a practice run, helping shape a future policy that would be harder to undo, or even a future version of the Clarity Act.
The CFTC is building its own path
The second major example in Clarity’s absence is the CFTC. Chair Mike Selig has also used the post-Clarity vacuum to advance crypto rulemaking. On Friday, the agency sent a proposal on crypto transactions and markets to the White House for review.
Selig is currently the only sitting member of the CFTC’s five-member commission, which has allowed him to act unilaterally. The agency has already begun work on rules for prediction markets, a sector closely tied to crypto. On crypto policy itself, the CFTC is still developing its approach, though it recently opened the door to crypto perpetual futures, or perps.
Selig has also said his staff is working on a way to apply a “crypto asset market” label to firms, similar to the CFTC’s existing category of designated contract markets, or DCMs.
Why agency rules still fall short of legislation
Taken together, the SEC and CFTC now have a long list of projects intended to recreate, piece by piece, parts of what the Clarity Act would have established. CoinDesk said many of those efforts rest on shakier ground and may not give the industry the stability it wants.
Those measures may also be more exposed to legal challenges because they are not rooted directly in statute. If courts are asked to weigh in, progress could slow even more.
That helps explain why Atkins spent months arguing that the Clarity Act was necessary. As he said in August, “Legislation remains indispensable to enacting ‘future-proofed’ rules of the road that are durable enough to protect the work we are undertaking today from being unwound by a future rogue regulator.”
CoinDesk noted that whether someone is “rogue” depends on the observer. Still, even as Atkins pushes ahead with rulemaking based on what he sees as the SEC’s existing authority, he has kept repeating his reservations about relying on regulation alone. He has described Congress as “Indispensible.”
In speeches earlier this year and last year, he made nearly the same point again: “Only Congress can future-proof regulation in this space.”
At the same time, Atkins has said the SEC can serve as an ally to legislative efforts. When he launched Project Crypto in November, he said: “What I envision aligns with legislation currently being considered by Congress and aims to complement, not replace, Congress’s critical work.” For now, however, that project stands on its own.