Senate Stalemate Shifts Focus to Agencies
The Digital Asset Market Clarity Act didn’t move forward in the Senate. That leaves the next phase of U.S. crypto regulation mostly with the SEC and CFTC. The shift could open more trading and investment to move onchain. But it also leaves a central question: how much certainty can regulators deliver without Congress? Interviews with senior executives and legal experts suggest regulation will keep moving. They don’t agree on whether agency action can last or whether businesses will keep adapting to rules that can change with politics and court fights.
Clarity Exposed Industry Divides
Lev Breydo, an assistant professor at William & Mary Law School, said Clarity showed divisions inside the industry. Ethics provisions and the yield fight with community banks mattered. A coalition that looked unified against Gary Gensler found out definitions create winners and losers, he said. That is not a small point. Even with the bill stalled, agencies are moving quickly to fill the gap.
SEC and CFTC Moves
The SEC’s five-year “Innovation Exemption” introduced September 17 lets qualifying venues trade tokenized U.S. stocks through blockchain liquidity pools while it works on permanent rules. The CFTC followed on October 5. It is seeking feedback on rules for leveraged retail crypto trading and a new registration category for crypto markets. That starts a public comment and rulemaking process, not immediate rules. The SEC’s October 1 custody proposal would let state trust companies safeguard client crypto. It would also allow advisers and funds to hold it themselves under certain conditions.
What Comes Next
Looking into 2027, Breydo expects the SEC to focus on completing offering and custody rules and building on its tokenized-stock exemption. He sees the agencies’ March joint interpretive release as an important foundation. It supersedes earlier guidance and allows coordination within existing law. But a key gap remains: ordinary, unleveraged spot trading still lacks comprehensive federal oversight, beyond the CFTC’s anti-fraud and anti-manipulation powers. Closing that gap was a central goal of Clarity. For some executives, the legislative setback could produce faster commercial opportunities. Paul McCaffery, head of digital assets at investment bank KBW, said the SEC and CFTC are already moving to give markets the regulatory certainty they need. He said that is unlocking a wave of M&A across digital assets, traditional financial services, and fintech. Bitwise Chief Investment Officer Matt Hougan said he sees the agency approach as more favorable in the short term than legislation that would have required years of follow-up rulemaking. He also expects more protocols to adopt token buybacks, especially buy-and-burn models, after SEC clarification he said gives investors greater confidence.
