The CLARITY Act Stalled. Crypto Regulation Didn't.

For months, the crypto industry has been waiting for Congress to establish something the United States has never really had: a comprehensive federal framework defining who regulates digital assets and under what rules.

The Digital Asset Market Clarity Act—commonly called the CLARITY Act—is intended to help answer the fundamental questions that have hung over crypto for years: Which digital assets are securities? Which are commodities? When does the SEC have jurisdiction? When does the CFTC have jurisdiction? And what rules apply to the exchanges, brokers, and other companies that facilitate these markets?

The House passed the legislation in 2025. The Senate has since worked on an extensively revised version, but it left Washington for its August recess without taking the anticipated vote.

The bill is not dead. Senate leadership filed a procedural motion that sets up a September 15 vote on whether to advance the legislation. Advancing the bill requires 60 votes, meaning Republican supporters will need Democratic votes as well.

Several substantial issues remain unresolved, including stricter anti-money-laundering protections, ethics rules involving government officials and their crypto interests, the treatment of rewards paid on stablecoin holdings, and concerns from banks that such rewards could pull deposits out of the traditional banking system.

The legislative clock is also becoming a problem. With midterm elections approaching, Congress has fewer working days available and many competing priorities. The probability that comprehensive crypto-market legislation becomes law this year has become less certain.

Congress was supposed to create the permanent rulebook. That has become harder.

But Washington has not stopped moving toward crypto regulation. Instead, some of the action is shifting from Congress to the regulatory agencies.

That matters because the SEC and CFTC already possess substantial authority under existing securities and commodities laws. They cannot accomplish everything Congress could accomplish through legislation, but they can do quite a lot—and they have started doing it.

On August 18, the Securities and Exchange Commission proposed a new regulatory framework called Regulation Crypto Assets.

The proposal would create special pathways for certain investment contracts involving crypto assets rather than forcing them into regulatory structures designed decades before blockchain existed.

• A startup exemption permitting qualifying offerings of up to $5 million over four years.
• A broader fundraising exemption permitting qualifying offerings of as much as $75 million during a 12-month period, subject to additional requirements.
• A conditional safe harbor addressing when a crypto asset arrangement can cease being treated as an investment contract.

The August proposal follows another major SEC and CFTC development from March. The agencies issued an interpretation establishing categories including digital commodities, digital collectibles, digital tools, stablecoins, and digital securities.

The SEC stated that digital commodities, digital collectibles, and digital tools are not themselves securities, although the manner in which a non-security crypto asset is offered can still involve an investment contract subject to securities law.

This begins replacing the old question—“Is crypto a security?”—with a much more useful question: “What kind of crypto asset is this, and how is it being offered or used?” That is a major step toward regulatory maturity.

The Commodity Futures Trading Commission is also using its existing authority to expand the regulated digital-asset market.

Earlier this year, the CFTC clarified pathways for true perpetual futures contracts tied to Bitcoin and other digital commodities to trade through regulated U.S. markets. Perpetual futures are among the most heavily traded crypto products globally, but much of that activity historically occurred outside the United States.

Bringing these products into the regulated U.S. financial system is another sign of a larger change: federal regulators are increasingly working on how crypto fits into the American financial system rather than debating whether it should be allowed into that system at all.

The CFTC’s Innovation Advisory Committee also met on August 20 with crypto regulation on its agenda, including ways existing regulatory authority can provide greater clarity while Congress continues working on a permanent market structure.

For years, one of the major obstacles to broader cryptocurrency participation in the United States has been regulatory uncertainty. Financial institutions, investment firms, exchanges, and ordinary investors have had to operate with unanswered questions concerning which rules apply and, sometimes, which government agency even has jurisdiction.

That uncertainty is gradually being reduced. The CLARITY Act would provide the strongest solution because federal legislation is harder for a future administration simply to reverse.

But even without immediate passage of the Act, the SEC and CFTC are moving toward frameworks that make it easier for digital assets and digital-asset businesses to operate within regulated American financial markets.

That does not guarantee higher crypto prices. Markets are affected by liquidity, interest rates, the economy, technology, adoption, investor psychology, and many other variables. But greater regulatory clarity removes one historically important obstacle to institutional and private investment. That is potentially bullish for long-term adoption.