The United States Congress had one job this autumn, as far as the digital asset industry was concerned: pass a market structure bill. It did not do it. On September 15, the Digital Asset Market Clarity Act — the CLARITY Act, H.R. 3633 — fell short in the Senate in a 49–50 vote, and with that, the last serious legislative route to a comprehensive federal crypto framework in 2026 closed. The industry braced for another stretch of ambiguity.
It got something else instead. Within 48 hours, the Commodity Futures Trading Commission had submitted a proposed rule on crypto asset transactions and markets to the Office of Management and Budget. The Securities and Exchange Commission, for its part, pushed ahead with its own proposed Regulation Crypto Assets. By the final week of September, the message from both agencies was unmistakable: if Congress will not legislate, the regulators will rule anyway.
That shift — from waiting on Capitol Hill to building policy through agency rulemaking — may define American crypto regulation for the next two years. It raises real questions about legal durability, political legitimacy, and what compliance looks like when the rulebook is being written in parallel by two different regulators instead of by statute.
What the CLARITY Act was supposed to do
The CLARITY Act was designed to settle the single most expensive question in American crypto: which assets and activities belong to the SEC and which to the CFTC. Under its framework, the CFTC would have become the primary regulator for spot cryptocurrency markets — a long-standing industry demand, given that the Commission oversees commodities markets but has never had full authority over the spot crypto market.
Its defeat was not about one provision. Reporting on the vote pointed to disagreements over government officials' crypto holdings and over stablecoin regulation as the fault lines that split the Senate. With the bill stalled, the industry faces the prospect of operating domestically without comprehensive federal market structure legislation through the November midterm elections and likely well beyond them.
That is the vacuum the agencies have now stepped into.
The CFTC moves first
The clearest signal came on September 17, when the CFTC submitted a proposed rule on crypto asset transactions and crypto asset markets to the Office of Management and Budget for review. The proposal itself had not yet been published when Bloomberg flagged the filing, but the timing was the message: two days after the Senate vote, the agency was already executing the plan its chairman had previewed in August.
CFTC Chairman Michael Selig had said in August that he would ask agency staff to find ways to codify market structure for digital assets if Congress failed to pass the CLARITY Act. He was explicit about the source of the mandate. In remarks delivered at the Innovation Advisory Committee Conference in Washington, D.C., Selig said:
"We owe it to the American people to do so. President Trump promised to deliver a crypto asset market structure, and we will help him deliver if Congress will not."
When Bloomberg reported the OMB filing on September 18, Selig shared it on X with an eyes emoji — a small gesture that nonetheless confirmed the filing was deliberate, not procedural drift. The agencies, in other words, are not waiting for a second legislative chance.
The SEC's parallel track: Regulation Crypto Assets
The Securities and Exchange Commission is moving on a separate but complementary path. Its proposed Regulation Crypto Assets would introduce flexible registration exemptions for crypto startups, with limits of up to $5 million and $75 million — an attempt to build a workable on-ramp for early-stage projects that the existing registration regime has largely frozen out. Public hearings on the proposal were scheduled to continue through October 20.
The cultural shift inside the agency may matter as much as the rules. Commissioner Hester Peirce publicly called the previous hard-line approaches "infantilizing investors," a striking departure from the enforcement-first posture that defined the Commission's earlier relationship with the industry. The SEC also signaled the same day the Senate vote failed that it intends to deliver for investors and innovators whether or not Congress passes legislation — pointing to the Regulation Crypto Assets framework as the operative path forward.
Industry observers noticed the speed of the pivot. ETF analyst Nate Geraci summed up the mood on X on September 28:
"Welcome to another week of crypto building w/out constraints of Clarity Act… SEC & CFTC already guiding the way. Two years to upgrade financial system."
Why the agencies think they can do this
The legal theory behind the push is that both agencies already have sufficient existing authority to regulate significant portions of the crypto market — they simply have not organized that authority into a coherent framework. The CFTC can police fraud and manipulation in commodity markets; the SEC can define and enforce registration obligations for assets that are securities. What the CLARITY Act would have done is draw a clean jurisdictional boundary and give the CFTC new spot-market authority. What the agencies are doing now is stretching their existing powers as far as they will go.
That approach has real limits. Administrative rules can be reversed by a future administration, challenged in court, and narrowed by judges skeptical of agency overreach. The p2p.org regulatory review published at the end of September put it bluntly: the failed cloture vote closes the 2026 statutory path, leaving compliance programs to operate against reversible administrative guidance for at least two more years. Statutes endure; rulemaking bends with elections.
There is also the coordination problem. The SEC and CFTC have overlapping interests and, historically, overlapping claims over digital assets. Two parallel rulemakings could produce a coherent framework — or two conflicting ones, with firms caught in between.
What it means for builders, investors and markets
For startups and institutions, the near-term implications are practical:
- A faster but thinner rulebook. Agency rules can arrive in months rather than years. But they lack the legal permanence and cross-agency clarity of a statute, which means compliance planning must price in reversal risk.
- Registration pathways for early-stage projects. The SEC's proposed $5 million and $75 million exemptions could meaningfully lower the cost of lawful experimentation — if the final rule survives scrutiny.
- Enforcement ambiguity persists. Rulemaking and enforcement are different muscles. Until final rules are in place, the industry still lives largely under the threat of enforcement action as a substitute for clear guidance.
- A compressed timeline. With midterm elections in November and both agencies racing through comment periods and hearings, the shape of the framework will be set — at least provisionally — within months.
The midterm clock
Lawmakers' failure to pass the act left the industry without clear guidance heading into the November midterms, and the agencies have signaled that they intend to fill the legal vacuum using the administrative resources available to them. Whether Congress revisits market structure after the elections depends on the composition and priorities of the next Congress — a variable no compliance officer can model.
What is certain is that the era of waiting is over. The CLARITY Act's defeat was supposed to leave a void. Instead, it handed the pen to the regulators. The industry asked Congress for a statute; it is about to get two agencies' worth of rules instead. For builders, the task now is the same as it always was — read the signals, prepare for multiple outcomes, and build compliance programs that can survive whichever version of the future arrives.
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