Clarity Act Is Dead. The SEC and CFTC Are Writing Crypto's Rules Instead

The Digital Asset Market Clarity Act never made it through the Senate. So the next round of US crypto rulemaking is being written by the SEC and the CFTC instead of Congress.

That shifts who gets to decide — and it is a weaker foundation. Agencies can move fast, but their work stays exposed to political change and court challenges, while only Congress can deliver rules with statutory durability.

The SEC moved first

On September 17, the SEC issued a five-year "Innovation Exemption" letting approved venues trade tokenized US stocks through permissioned automated market makers and liquidity pools without registering as an exchange.

The relief comes with strings attached: venues must cap how many symbols they list and how much volume they trade, and issuers can block their own stock from appearing at all. Anti-fraud and anti-manipulation rules still apply in full. SEC Chair Paul Atkins called the exemption temporary, and said it must be followed by durable rulemaking.

The CFTC followed two weeks later

On October 5, the CFTC published an advanced notice of proposed rulemaking on leveraged retail crypto trading, floating a new registration category for crypto asset markets and opening a 60-day comment window.

There is no rule text yet — the notice is the agency asking the industry what the rules should say.

What's still broken

Plain spot trading, with no leverage involved, still has no comprehensive federal oversight. The CFTC can only chase fraud and manipulation after the fact, not police the market upfront, and closing that hole was the entire point of Clarity.

Industry reaction split down the middle: Bitwise's Matt Hougan argued the dead bill actually shields incumbents like Coinbase and Kraken by delaying cheaper competition. Temporal's Cathy Yoon counted it as a win that SEC staff will say out loud that writing software is not the same as running a financial intermediary, while noting staff guidance is not law.

Why it matters for you

Expect faster experimentation and less durable certainty. If you hold anything tied to tokenized equities, DeFi venues or prediction markets, the rules underneath you will shift with each administration. Expect dealmaking to accelerate too, as regulated players buy their way into markets they cannot build into fast enough.