Following the Senate's failure to advance the comprehensive crypto regulation proposal known as the Clarity Act, federal and state authorities in the United States are moving swiftly to fill the void in digital asset oversight. Just two days after the bill stalled, the Securities and Exchange Commission used its existing authority to expand its crypto rulebook, issuing an order that creates a temporary pathway for the trading of certain tokenized stocks, bringing the financial markets a step closer to around-the-clock operation. On the same day, the Commodity Futures Trading Commission submitted a crypto rulemaking proposal to the White House for review, though details have not been made public. A notice from the Office of Management and Budget confirmed the rules are still awaiting approval.
The crypto industry, which had backed the Clarity Act, says it is eager for regulatory guidance tailored to the emerging sector and has been actively working to shape rules in its favor. Summer Mersinger, CEO of the Blockchain Association and a former CFTC commissioner, noted that traditional financial institutions exploring the use of crypto technology are currently held back by regulatory ambiguity. She said that establishing some level of certainty would genuinely open the door for greater investment, deeper integration with legacy finance, and overall growth in the space.
Coinbase CEO Brian Armstrong has been a key industry voice urging Congress to act on the Clarity Act. Speaking to CNBC after the September 15 procedural vote failed, he said the industry can no longer afford to wait on lawmakers. Senate Banking Committee Chairman Tim Scott, a Republican from South Carolina, has also called on federal agencies to establish clear rules of the road for digital assets before Congress passes legislation. However, new federal regulations will not happen overnight. When asked about its plans for crypto oversight, the CFTC pointed to a statement from Chairman Michael Selig on September 16, in which he said President Trump has committed to delivering a forward-looking market structure for crypto assets no matter what, and the agency will use its existing statutory powers to help accomplish that goal.
Media outlets also reached out to the SEC regarding next steps for digital asset industry regulation. A spokesperson said the agency is considering a proposal to modernize custody rules for investment advisers' client assets and fund assets, including the handling of crypto assets. Caroline Pham, who served as acting CFTC chair from the start of Trump's second term until December, told CNBC that a Plan B at the agency level has always been on the table. Pham, now CEO of crypto service provider MoonPay Institutional and also serving as its chief legal and administrative officer, stressed the importance of having contingency plans. She explained that both the CFTC and SEC have been advancing parallel efforts since the start of the second Trump administration, including the July 2025 launch of Project Crypto, an initiative aimed at modernizing securities regulation and harmonizing crypto rules between the two agencies. In August 2025, Pham announced the CFTC would begin implementing recommendations from the President's Digital Asset Markets Working Group.
State authorities are also vying for influence over the asset class as the federal government struggles to move forward. In a September 14 letter, a bipartisan coalition of state attorneys general urged the Senate Banking Committee to oppose the Clarity Act, arguing it would weaken states' ability to regulate securities markets. In their letter to Scott and the committee's top Democrat, Senator Elizabeth Warren of Massachusetts, they called on the Senate to preserve state police powers and ensure states retain the necessary tools to protect Americans from predatory fraudsters.
Aaron Klein, a senior fellow in economic studies at the Brookings Institution, said he does not believe states are best positioned to regulate domestic and international capital markets. Klein, a former senior staffer on the Senate Banking Committee, said capital market regulation should occur at the federal level. However, he acknowledged that states hold significant power when it comes to combating fraud and scams. In the absence of a federal crypto framework, he suggested states should take a more active role in monitoring payment processing and prosecuting criminals. Mersinger pointed out that state enforcement only kicks in after a crime has already occurred. She said what the industry really needs is federal oversight to prevent situations where state attorneys general are forced to step in with lawsuits due to bad actors or harm to state residents.
With the midterm elections now in focus, lawmakers have not entirely given up on the Clarity Act. Senator Thom Tillis, a Republican from North Carolina, changed his vote to oppose the bill, a move that allows him to file a motion to bring it back up for reconsideration.
Comments