The failure of the Digital Asset Market Clarity Act to advance in the Senate has shifted U.S. crypto regulation to the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC), creating opportunities for more trading and investment to move onchain while leaving key questions about regulatory durability unresolved.
Legal experts and industry executives agree that regulation will continue evolving, but they differ on whether agency action can serve as a stable foundation or leave businesses vulnerable to political and legal shifts.
Agencies Moving Quickly
The SEC introduced a five-year Innovation Exemption on September 17, allowing qualifying venues to trade tokenized U.S. stocks through blockchain liquidity pools while permanent rules are developed. The CFTC followed on October 5, seeking public feedback on rules for leveraged retail crypto trading and a new registration category for crypto markets.
The SEC also proposed on October 1 that state trust companies could safeguard client crypto, and advisers and funds could hold it themselves under certain conditions.
Opportunities and Concerns
Some executives see commercial benefits from the legislative setback. Paul McCaffery, head of digital assets at investment bank KBW, noted that SEC and CFTC action is already prompting mergers and acquisitions across digital assets and traditional finance. Bitwise Chief Investment Officer Matt Hougan argued the agency approach could deliver faster certainty than legislation requiring years of follow-up rulemaking.
Developers are watching whether regulators distinguish software creation from operating a financial intermediary. Cathy Yoon, chief legal officer at Temporal, said explicit SEC staff guidance recognizing developers as software creators represents progress, though she noted staff FAQs are not official SEC rules.
Regulatory Gaps Remain
A central gap persists: ordinary, unleveraged spot trading still lacks comprehensive federal oversight beyond the CFTC's anti-fraud and anti-manipulation authority. Closing that gap was a core goal of the Clarity Act.
Legal experts emphasize that implementation remains difficult without legislation. Derek Lowrey, head of legal at Newton Labs, said overseeing venues, intermediaries, decentralized finance and spot markets is harder without statutory authority. Kevin Kreuser, general counsel at D3, noted that agency action does not provide the same long-term certainty as legislation, particularly for tokenized real-world assets requiring clearer jurisdictional boundaries.
Uneven Landscape
Hougan argued that Clarity's failure preserves a competitive advantage for established exchanges like Coinbase and Kraken, potentially delaying competition that could reduce costs. The emerging outlook features faster experimentation but unresolved questions about competitive access and regulatory durability. Legal scholar Lev Breydo said only Congress can deliver a comprehensive framework with statutory durability, though he expects the SEC to complete offering and custody rules and expand its tokenized-stock exemption into 2027.
