CLARITY Act stalls as US crypto regulators write rules without Congress
The Senate stopped short of debating a federal crypto market structure bill. A week later, the CFTC chair was still laying out plans for tokenized collateral and round-the-clock markets. The agencies can act under existing law, but their records show how far each action actually reaches.
- The Sept. 15 Senate cloture vote on the CLARITY Act ended 49 to 50, with one senator absent.
- The SEC’s March 17 crypto interpretation describes five asset categories but creates no new spot market regulator.
- An Aug. 18 SEC proposal includes offering exemptions of $5 million and $75 million, subject to public comment.
- The SEC’s Sept. 17 stock trading exemption expires in 2031 and covers a defined venue model.
- A CFTC crypto markets measure entered White House review on Sept. 17 at the prerule stage.
The Commodity Futures Trading Commission wants markets ready for tokenized collateral and 24-hour trading. Its chair, Michael Selig, said as much at a Treasury market conference on Sept. 22, one week after the Senate blocked debate on the CLARITY Act. He described work on stablecoins as derivatives collateral and said some products, including crypto, may suit continuous trading. The agency had already sent a crypto market measure to White House review. Selig’s remarks were a statement of direction, not the publication of that measure.
The order of events matters. The Securities and Exchange Commission had proposed crypto offering rules before the Senate vote. It issued a limited exemption for tokenized stock trading two days afterward. The CFTC filed a separate measure for preliminary review the same day, as crypto.news reported when the CFTC submission appeared. Washington is writing parts of a rulebook while the bill that would set its statutory foundation remains stalled.
How much of a market can those parts govern? The public documents give a more useful answer than the shorthand that regulators have replaced Congress. One action interprets existing securities law. Another proposes exemptions for raising money. A third permits a specific way to trade tokenized stocks. The CFTC’s next rule has not yet been released for public inspection. None is the spot digital commodity market law contemplated by CLARITY.
The Senate rejected debate, not a final crypto law
On Sept. 15, the Senate voted on cloture on a motion to proceed to H.R. 3633. The official roll call records 49 votes for cloture, 50 against and one senator not voting. Sixty votes were required. Senators did not vote on final passage or settle the bill’s provisions through floor amendments.
Some accounts inverted the numbers, describing 50 votes in favor and 49 against. The Senate record says the reverse. Either count falls short of 60, but a feature about who can write law should get the legislature’s own vote right. The 49 supporting senators were 11 votes short of the threshold. Four Republicans voted against the motion, including Thom Tillis, whose procedural switch left a route to seek reconsideration. The bill remained available for further negotiation; its Sept. 15 path to debate was blocked.
CLARITY aimed to divide oversight of digital assets and their markets between the SEC and CFTC, including a registration structure for digital commodity intermediaries. Congress had been considering a more complete answer to questions that agencies now confront through rules, interpretations and orders. The House passed its version in July 2025. Its later Senate text changed during negotiations, so an account of a disputed September provision must specify which version it describes. The Senate-reported version remains a public reference, but it should not be mistaken for every late negotiating draft.
The disagreement was political and substantive. Senate Banking Chair Tim Scott said after the vote that the SEC and CFTC should set rules until Congress legislates. Democratic Senator Mark Warner said he wanted digital asset legislation, but would not advance this version without stronger restrictions on senior officials profiting from policies affecting their crypto holdings. Banking organizations separately pressed for tighter restrictions on rewards associated with holding stablecoins, saying deposit competition could affect lending. Those groups made a policy argument; no projected deposit loss should be treated as an observed outcome.
Seven Democratic senators who opposed the motion said the following day that they remained committed to bipartisan legislation. Calling the bill law would be false. Calling it permanently dead would go beyond the vote.
The SEC can interpret a transaction without licensing its market
The regulatory work did not begin on Sept. 15. On March 11, the SEC and CFTC signed a coordination agreement covering shared definitions, examinations and enforcement. Six days later, the SEC issued interpretive release Nos. 33-11412 and 34-105020, with accompanying CFTC guidance. It described digital commodities, collectibles, tools, stablecoins and digital securities. It addressed staking, mining, airdrops and wrapping, as well as when a nonsecurity crypto asset can be sold as part of an investment contract. The agencies’ March interpretation was an exercise of their existing authority.
The distinction between an asset and a transaction is central. A token need not itself be a security for a promoter’s offer of it to involve an investment contract. The SEC’s description of an asset does not remove the securities laws from every transaction in that asset. Nor does calling an asset a digital commodity hand the CFTC full supervision of every spot exchange that lists it. An earlier crypto.news examination of the SEC’s classification of XRP addresses the separate question of how long an agency interpretation may last.
Consider a platform that lists a digital commodity for ordinary purchase and another platform that offers leveraged positions in the same asset. The asset label may be the same. The activity and applicable jurisdiction are different. The CFTC regulates derivatives and certain leveraged retail commodity transactions under existing law. For ordinary spot digital commodities, it has described its federal role principally as enforcement against fraud and manipulation, without general day-to-day supervision of spot exchanges. Its own account of the distinction is unusually clear.
That is the gap CLARITY was designed to address. The SEC and CFTC can coordinate their interpretations. They cannot create an unrestricted federal spot market mandate merely by agreeing which tokens count as commodities. An agency can regulate conduct within the perimeter Congress gave it. It cannot vote itself the rest of the perimeter.
There is still practical value in the interpretation. An issuer deciding whether a proposed token sale needs securities registration now has a published view from the SEC. A derivatives venue knows the CFTC says it will administer the Commodity Exchange Act consistently with that view. The treatment could shape business decisions immediately. It is still different from a new statute governing intermediaries across the spot market. A court or later commission can test or revisit an agency’s reading of existing law.
Four records show why the ‘new rulebook’ is still uneven
The primary documents can be sorted by two questions: has the action taken effect, and does it govern ordinary crypto spot trading? The answer changes in every row.
| Record as of Sept. 23 | Legal stage | Market activity it addresses | What it does not do |
| SEC-CFTC interpretation, March 17 | Issued interpretation | Securities treatment of specified crypto assets and transactions | Create a new spot digital commodity exchange regime |
| SEC Regulation Crypto Assets, Aug. 18 | Proposed rule, comments due Oct. 20 | Certain offerings involving crypto asset investment contracts | Give all token sellers a live exemption today |
| SEC tokenized stock order, Sept. 17 | Effective conditional exemption through Sept. 17, 2031 | A defined model for trading tokenized listed stocks | License ordinary crypto spot exchanges |
| CFTC crypto markets filing, Sept. 17 | Prerule submission in executive review | Details have not been made public | Put a final crypto market rule into effect |
One of these measures is an effective exemption. One remains a proposal. Another is a public interpretation, and the fourth is a filing title and review status. Describing all four as ‘rules now in force’ would turn a process into a result. More tellingly, the effective exemption concerns shares, which remain securities, while the largest proposed jurisdictional change in CLARITY concerned digital commodity markets. The most visible new trading permission sits on a different side of the SEC-CFTC divide.
The CFTC review record names ‘Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets,’ identifies the agency, and labels its stage ‘Prerule.’ It gives a Sept. 17 receipt date. It does not disclose draft provisions or show a commission vote on a proposed or final rule. That small entry proves that a measure entered review. It does not prove what legal powers the eventual text will claim.
Selig offered a possible route in August. He said staff were examining whether existing registrants and unregistered crypto exchanges could be designated as a type of CFTC designated contract market, with leveraged or margined crypto trading under tailored rules. His remarks also described working with onchain software developers. They are evidence of his intended approach, not a substitute for the unreleased CFTC text. Whether the agency’s eventual proposal fits its existing authority depends on its actual provisions.
The narrower route may still change a great deal for firms that want to offer margined crypto trading in the United States. It would not automatically cover every app where a customer buys and withdraws an unleveraged token. That missing customer, venue and transaction sit at the center of the congressional question.
The SEC’s $75 million route is a proposal with an expiry problem
The SEC’s Aug. 18 proposal would give eligible projects two tailored ways to offer investment contracts involving crypto assets without registering the offering. One would allow up to $5 million over a four-year period. Another would permit up to $75 million in each 12-month period, with financial statements and ongoing reporting alongside required disclosures. It proposes a conditional safe harbor concerning when the related investment contract no longer applies. The published proposal sets an Oct. 20 comment deadline. A crypto.news account of the offering proposal examines those routes in more detail.
The proposal does not say that every token becomes exempt from securities law after four years. Its application depends on the facts of an issuer’s commitments and compliance with its conditions. It does not license an exchange to ignore laws governing securities activity. Antifraud provisions remain relevant. And none of the proposed fundraising routes can be used merely because the SEC has announced them; a final rule would have to follow the comment process.
The policy choice is significant. Projects often raise money while a team is still promising to build the network on which a token’s value might depend. The SEC is trying to specify how that fundraising stage might be conducted and, under stated conditions, how the associated investment contract could end. The proposal answers a question about capital raising. It does not supply a federal registration system for the entire digital commodity spot market.
That distinction has an institutional consequence. A company can plan a token offering around a published proposal only provisionally. It can plan around an effective rule more confidently, while still accounting for future changes and court review. A national law fixing the agencies’ mandates would require another institution to change it. Industry advocates want the agency work to advance precisely because waiting for that institution has not produced a bill. The staged process creates rules sooner in some corners and leaves others open.
A five-year stock exemption has a narrower address
The SEC’s Sept. 17 order, release No. 34-106402, is the most concrete post-vote action. It temporarily exempts qualifying Tokenized Securities Venues from the Exchange Act definition of ‘exchange’ for a particular model of permissioned automated market maker trading in tokenized National Market System stocks. It grants separate conditional relief to certain liquidity providers from the definition of ‘dealer.’ The 60-page order states that the exemptions run until Sept. 17, 2031, unless the commission changes them under its authority.
Stockholders must have the same rights and privileges as holders of an equivalent traditional share. The venue faces limits on symbols and trading volume, must stop trading when the underlying stock is halted, and must allow an issuer to object when an unaffiliated third party tokenizes its shares. The smart contracts used for the trading model must be public and auditable on a public, permissionless ledger, while access to the venue is restricted to approved participants. The order does not exempt fraud or manipulation.
Those conditions illustrate both the potential and the boundary of agency action. An SEC exemption can open a defined route for trading securities without waiting for Congress to rewrite every exchange rule. It does not make all decentralized trading lawful or designate the CFTC as supervisor of every crypto asset. SEC Chair Paul Atkins called the measure a bridge and said durable rulemaking would need to follow. A crypto.news report on the tokenized stock exemption looks at the possible commercial users. A bridge is useful. It is not the destination.
The order deserves scrutiny on its own merits, too. Its volume caps are meant to limit disruptions if prices in an automated pool diverge from shares trading in conventional markets. Disclosure and records conditions give the SEC a way to see how the model operates. Whether actual venues satisfy the conditions, attract activity and preserve shareholder rights is an observable question, not an assumption to be filled in by the agency announcement.
Supporters of agency action have a strong practical case
Scott’s call for regulators to act did not require the claim that legislation was unnecessary. Selig himself said in August that a statute was the strongest way to fix the SEC-CFTC jurisdictional line and set principles for spot crypto markets. He nonetheless directed CFTC staff to examine rules under current authority. Those positions can coexist: a firm needs to know what rules apply to a proposed product now, even when Congress might later change the governing law.
Atkins made a related case for using a temporary SEC exemption while the commission studies tokenized stock trading. The Sept. 17 order imposes participant screening, trading limits, disclosure, records, issuer rights and the ordinary securities law bans on fraud and manipulation. It is an intervention with conditions, not an unregulated free pass. His argument is that an observed market can inform permanent rules better than a market that cannot start.
Coin Center, a crypto policy organization, made a different case within the same debate. Its March submission urged broad prospective rulemaking over individual relief, arguing that selective exemptions can favor applicants with the resources to seek them and leave decentralized projects outside. That criticism does not show the SEC order is improper. It identifies a question the order cannot settle: whether other workable models get an equivalent path.
Warner’s opposition to the Senate bill is another constraint on a simple ‘Congress failed, agencies solved it’ account. He said the dispute over ethics requirements involving elected officials prevented his support despite progress on national security issues. Rules from financial regulators about trading venues do not resolve the elected-official ethics issue that helped stop the vote. Banking groups’ concerns about rewards tied to stablecoin balances likewise involve a separate dispute over the boundary between payments and deposit competition. The missing legislation is missing for reasons the agencies’ crypto rulemaking cannot erase.
The decisive test is an ordinary spot trade
Take a customer who deposits dollars on an exchange, buys an unleveraged digital commodity and withdraws it to a wallet. The March interpretation helps describe the asset and the legal treatment of a particular sale. The SEC’s offering proposal could matter to an earlier fundraising transaction involving that asset. The tokenized stock order is irrelevant to this trade. The CFTC’s unpublished measure cannot yet be applied to it, and Selig’s public example centers on leveraged or margined trading.
What federally supervises that ordinary spot exchange’s routine operations? Existing anti-fraud powers, applicable state regimes and other federal obligations do not amount to the dedicated CFTC spot-market registration and supervision framework CLARITY sought to create. This is the part of the rulebook agencies cannot simply announce into existence. The difference is more than durability: it is the scope of the legal authority available in the first place.
That customer example is also a way to judge the feature’s claim. If Congress passes a law assigning broad spot digital commodity oversight, the gap narrows by statute. A crypto.news look at Bitcoin after the Senate vote addresses the asset’s current classification. If the CFTC publishes a measure that identifies an existing legal basis covering more of the ordinary spot transaction than Selig’s August remarks suggested, its precise terms will need to be examined. The Sept. 17 review listing alone does not answer either point.
The limits run in both directions. The failure of CLARITY did not repeal securities or commodities law, undo the SEC’s March interpretation, or stop agencies from proposing and issuing measures within their authority. The SEC stock exemption is real. So are its boundaries. The CFTC may yet publish a consequential proposal. Until it does, a filed title should not be asked to carry the weight of a completed rule.
What to watch
The CFTC proposal: Watch for publication of the text tied to RIN 3038-AF80 after executive review. Its treatment of unleveraged spot trading is the most direct test of its reach.
The SEC comment deadline: Comments on Regulation Crypto Assets are due Oct. 20, 2026, under the published proposal. Any subsequent final text could change the $5 million and $75 million routes.
The tokenized stock venues: Public venue notices, trading volume and issuer objections will show whether the SEC’s five-year exemption becomes a used market or remains an available permission.
The Senate’s next motion: A renewed effort to proceed to H.R. 3633, revised bill text or a new bipartisan agreement would change the legislative outlook. The Sept. 15 cloture vote did not decide final passage.
The spot exchange question: Any proposed CFTC registration requirements should be read for the products and transactions they cover, not only the number of exchanges that might apply.
FAQ
Did the CLARITY Act fail in the Senate?
The Senate rejected a motion to end debate on whether to proceed to H.R. 3633 on Sept. 15, 2026. Senators did not take a final passage vote. The legislation remains unresolved.
What was the actual CLARITY Act vote count?
The Senate’s official roll call records 49 yeas, 50 nays and one senator not voting. The motion needed 60 votes to advance.
Did the SEC and CFTC replace the CLARITY Act?
No. They have interpreted existing law, proposed rules and issued a limited exemption. Those actions do not enact the spot digital commodity framework that Congress considered.
Are the SEC’s $5 million and $75 million crypto exemptions available now?
They were proposed on Aug. 18, 2026. The published proposal calls for comments through Oct. 20; the new exemptions would need a final rule before taking effect.
What did the SEC allow for tokenized stocks?
Its Sept. 17 order temporarily permits qualifying venues to trade tokenized listed stocks through a defined permissioned model under conditions. The exemption runs to Sept. 17, 2031, unless modified.
Has the CFTC published its new crypto market rules?
The public Sept. 17 record identifies a CFTC measure at the prerule stage of White House review. It does not make a rule final or disclose the measure’s operative text.
Does the CFTC regulate all spot Bitcoin exchanges?
The CFTC has fraud and manipulation authority over spot digital commodities, but its general regulatory remit centers on derivatives and certain leveraged transactions. The proposed comprehensive spot exchange framework was part of CLARITY.
What happens if Congress never passes CLARITY?
The SEC and CFTC can continue acting under their existing statutes, and their measures can still matter to specific products. Whether they cover the wider spot market depends on the reach of those statutes and the text of future rules. This is educational analysis, not investment advice.
Disclaimer: This article is for information and educational purposes only and does not constitute financial or investment advice. Figures reflect regulatory filings and reporting available at the time of writing and change with each disclosure. Nothing here is a recommendation to buy, sell, or hold any security or asset. Always do your own research. Information is accurate as of September 24, 2025.
