Regulators Stop Waiting for Congress: Inside the SEC and CFTC’s Push to Write Crypto’s Rules

IT 6 Minutes

On September 15, 2026, the United States Senate held the most consequential vote in crypto history that you may have already forgotten about. The Digital Asset Market Clarity Act — known as the CLARITY Act — needed 60 votes to advance to the Senate floor. It got 49. The vote wasn’t close enough to matter, and America’s most ambitious attempt to give the crypto industry a comprehensive legal framework died in a procedural moment that felt almost anticlimactic.

But the story didn’t end there. With Congress stalled, the SEC and the CFTC stopped waiting — and began writing crypto’s rules themselves.

The Rise and Fall of the CLARITY Act

The CLARITY Act had one of the more impressive legislative runs in recent crypto history before hitting the Senate wall. Introduced by Representative French Hill in May 2025, it passed the House on July 17, 2025, by a resounding 294-to-134 margin — genuine bipartisan support that the crypto industry had spent years trying to build.

The bill aimed to do something genuinely difficult: draw a clear line between digital assets regulated by the SEC as securities and those regulated by the CFTC as commodities. It introduced a “mature blockchain” test to determine when a cryptocurrency had grown decentralized enough to escape securities law, and carved out a framework for stablecoins to operate in the payments market.

Senate Banking Democrats had concerns. The ethics provisions — specifically the bill’s DOJ-only enforcement mechanism and a 2029 sunset date — drew sharp criticism. Senators Mark Warner and Catherine Cortez Masto publicly tied their floor votes to law enforcement sign-off. The Senate Banking Democrats issued a national security advisory warning that the bill “fails to address key vulnerabilities.”

By July 2026, Senate Majority Leader Thune publicly cast doubt on passage before the August recess. On September 15, the cloture vote that would have sent the bill to the floor failed 49-to-50, eleven votes short of the 60 needed. For the crypto industry, it was a moment both familiar and stinging.

The SEC’s March Interpretive Release: A Token Taxonomy Arrives

Months before the Senate vote collapsed, the SEC had already signaled it wouldn’t wait indefinitely for Congress to act. On March 17, 2026, the agency published a landmark interpretive release — Release 33-11412 — that the CFTC formally joined one week later.

The release did something the crypto industry had demanded for years: it laid out a five-category taxonomy that specifies when a digital asset is — and is not — a security under existing federal law.

  • Digital commodities — proof-of-work assets where mining drives value through the protocol rather than managerial efforts — are generally not securities.
  • Digital collectibles — NFTs tied to genuine cultural or artistic value — are generally not securities.
  • Digital tools — utility tokens that function as access keys to software products — are generally not securities.
  • Payment-type stablecoins meeting conditions from prior SEC guidance are generally not securities.
  • Digital securities — tokenized equity, debt instruments, and assets that meet the classic Howey test — clearly fall under SEC jurisdiction.

Crucially, the CFTC announced it would administer the Commodity Exchange Act “consistent with the SEC’s framework,” effectively extending anti-fraud and anti-manipulation authority over non-security crypto assets across the board. The release also addressed long-contested edge cases: mining is generally not an investment-of-money transaction; wrapping a non-security asset doesn’t typically create a new security on its own; and airdrops without consideration usually don’t satisfy Howey’s investment prong.

“Regulation Crypto Assets”: The SEC’s New Capital-Raising Framework

If March’s interpretive release was the definitional foundation, August 2026 brought the framework for actually raising money with crypto assets in the United States.

On August 18, 2026, SEC Chairman Paul Atkins unveiled what he called the centerpiece of his “Project Crypto” initiative: a proposed rule set called “Regulation Crypto Assets” (Release 33-11434). In Atkins’ own words, the proposal offers “bespoke pathways to raise capital in the U.S., while providing appropriate investor protections” — drawing, as he noted, “heavily from Congressional work over recent years, particularly the CLARITY Act.”

The proposal establishes two main capital-raising pathways:

  1. Startup Exemption: Issuers can raise up to $5 million over a four-year window using a new Form NOR filed on EDGAR. No financial statements are required, and the exemption is available to non-U.S. entities. One-time use per crypto asset.
  2. Fundraising Exemption (modeled on Regulation A): Tier 1 allows up to $20 million in 12 months; Tier 2 allows up to $75 million in 12 months but requires audited financial statements. Nonaccredited investors are capped at purchases equal to 10% of their annual income or net worth.

Perhaps most significantly, the proposal includes an investment contract safe harbor that lets an issuer certify — via a new Form TR — that it has completed its “essential managerial efforts,” effectively converting what was once a security into a commodity and exiting the registration obligations of federal securities law. This provision directly implements principles from the March interpretive release and codifies the concept the industry has long called “sufficient decentralization.”

The comment period closed October 20, 2026. Legal analysts at Sidley Austin described final rules as “at least several months away,” putting implementation into 2027 at the earliest.

The CFTC’s Parallel Track: Regulation CTX and Regulation CAM

The SEC isn’t the only regulator filling the vacuum left by Congress. On October 5, 2026, the CFTC issued an Advance Notice of Proposed Rulemaking covering two new rulebooks that would govern the retail crypto market directly.

Regulation CTX (Crypto Asset Transactions) would govern retail transactions involving leverage, margin, or financing. Regulation CAM (Crypto Asset Markets) would create a comprehensive market integrity framework for the platforms on which those transactions occur.

If finalized, the rules would impose the kind of risk disclosure requirements, margin limits, and market conduct standards already familiar to forex and futures traders — applied to any retail platform that allows leveraged crypto trading in the United States. The proposals signal a CFTC that sees itself as more than a commodity market cop.

Public comments on both proposals are due December 14, 2026, putting the CFTC’s rulemaking timeline roughly in parallel with the SEC’s. Both agencies are building foundations that Congress may either ratify through legislation or leave in place as a de facto regulatory regime.

What the Midterms Mean for Crypto Legislation’s Next Round

Yesterday’s midterm elections add one more variable to the regulatory picture. The composition of the new Congress will determine whether the CLARITY Act’s sponsors have a realistic path to reviving it in the next session.

What matters is the Senate arithmetic. The September failure came down to 11 votes. If the new Senate arrives with a different composition — either more crypto-friendly members or a shift in caucus priorities on enforcement provisions — the bill’s sponsors have signaled they intend to bring it back. The GENIUS Act’s success in July 2025 provides a useful roadmap: targeted legislation focused on a single issue (stablecoins) proved easier to advance than a comprehensive market structure bill. Some observers believe the next Congress may take a similarly incremental approach — leaving the broader SEC/CFTC jurisdictional questions to emerge from the ongoing rulemakings already underway.

Internationally, competitive pressure is building. The United Kingdom’s Finance Bill 2026-27, introduced in the October 28 Budget, would treat eligible stablecoins as money-like for tax purposes, exempting individual holders from capital gains tax and providing deferral relief on liquidity pool transfers — expected to take effect April 2027. If the UK framework advances as planned, it could increase pressure on U.S. lawmakers to match its clarity.

What This Means for You

For crypto investors and builders, the picture is more defined than it has ever been — but not fully settled. Here’s how to think about where things stand:

  • If you hold Bitcoin, Ethereum, or most major proof-of-work assets: The March 2026 interpretive release substantially confirms they are treated as commodities, not securities. That’s a meaningful legal baseline, even if it isn’t legislation.
  • If you’re a founder raising capital with a new token: Regulation Crypto Assets — once finalized — will offer a clear set of on-ramps into the U.S. market, with specific filing requirements, investor caps, and an exit path from securities obligations once your network is sufficiently decentralized.
  • If you trade on margin or use leveraged crypto products: Watch the CFTC’s Regulation CTX comment process closely. The rules as proposed would significantly affect how retail platforms can offer leverage in the United States, and the December 14 comment deadline is an opportunity to have input before the rules are locked in.
  • If you’ve been waiting for a single congressional act to resolve everything: The CLARITY Act may come back in the new session. But the agencies have been building the framework while Congress debated — and the pieces are starting to fit together.

When the Senate vote failed in September, it was tempting to read it as crypto regulation stalling out again. What happened instead was that the rulemaking apparatus accelerated. The SEC’s five-category taxonomy, its proposed capital-raising framework, and the CFTC’s parallel market conduct rules represent the most coherent federal regulatory architecture digital assets have ever seen. Whether Congress eventually passes the CLARITY Act or something like it, the agencies have made clear they are no longer waiting for permission.

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Published by jamrockbrown

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