SEC and CFTC Accelerate Crypto Rulemaking After Clarity Act Senate Defeat
Following the Clarity Act's failure in the Senate, the SEC and CFTC are rapidly advancing their own regulatory frameworks. The SEC has proposed custody rules and tokenization exemptions, while the CFTC submitted a market structure proposal to the White House, aiming to provide clarity without congressional legislation.
Key points
- The Clarity Act failed a procedural Senate vote on September 15, prompting federal agencies to act under existing authorities.
- The SEC issued an order creating a temporary pathway for trading tokenized stocks and is finalizing custody rules for investment advisers and broker-dealers.
- The CFTC submitted a rulemaking proposal to the Office of Management and Budget and issued a no-action position for software developers.
- State attorneys general opposed the Clarity Act, arguing it would limit their ability to regulate securities and combat scams.
- Industry leaders and regulators emphasize the need for regulatory certainty to attract traditional finance investment and integration.
Background
The Clarity Act, a comprehensive market structure bill, had been the primary vehicle for establishing a federal crypto framework. Previous attempts to pass the bill stalled due to ethics concerns and partisan disagreements, leading to a shift in strategy toward agency-led rulemaking. Regulators had previously signaled a 'Plan B' to use existing statutory powers if Congress failed to act.
How outlets are covering it
CNBC highlights the urgency of federal action to prevent regulatory uncertainty from hindering traditional finance integration, citing industry leaders like Brian Armstrong and Summer Mersinger. CoinDesk focuses on the SEC's specific technical moves, such as custody rules and tokenization exemptions, describing them as 'foundation laying' for assimilating crypto into the securities industry. The Block emphasizes the CFTC's proactive stance, noting that the agency is pressing ahead without Congress despite concerns over Trump's crypto wealth and potential conflicts of interest. State attorneys general, as reported by CNBC, argue that federal preemption would weaken their ability to protect consumers from scams, a view contested by industry advocates who prefer federal oversight.
Why it matters
The shift from legislative to regulatory action creates a fragmented but immediate framework for crypto markets. This move aims to provide the certainty needed for institutional adoption, but it also raises questions about the durability and comprehensiveness of agency rules compared to a comprehensive law, especially amid ongoing political and ethical debates.
What to watch
The SEC is expected to formally propose custody rules after White House review, while the CFTC awaits feedback on its market structure proposal. The Clarity Act may still be reconsidered in the Senate, but the focus has shifted to the midterm elections and the potential for a new congressional session to revisit the legislation.
- U.S. regulators rush to write crypto rulebook after Clarity Act stalls in Senate CNBC
- Next for the U.S. SEC: Agency's chief crypto counsel illuminates path for custody CoinDesk
- CFTC files crypto asset rulemaking with White House, pressing ahead without Congress The Block
- Crypto Can't Go Mainstream Without the Clarity Act Bloomberg.com
- All Jackson County voters will have a say in these two county Legislature elections InsuranceNewsNet
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