Clarity Act Stalls, CFTC Prepares Backup
The fate of U.S. crypto regulation is approaching a crossroads as the Digital Asset Market Clarity (Clarity) Act remains stuck in the Senate, lacking the six Democratic votes needed to reach the cruci
In this vacuum, Commodity Futures Trading Commission (CFTC) Chairman Michael Selig has made clear that his agency will not wait indefinitely. At the first meeting of the CFTC’s Innovation Advisory Committee, Selig stated that if Congress does not act on the Clarity Act, he will instruct staff to use existing authorities to propose a regulatory framework for digital assets. This stance was echoed on Thursday, when Selig told industry executives that the agency is ready to fill the gap left by legislative inertia.
Gridlock in Washington is accelerating regulatory action elsewhere.
The Clarity Act would require at least 60 votes to advance in the Senate before returning to the House of Representatives.
Selig Signals No Waiting on Crypto Rules
Selig’s position marks a shift from prior years, when federal agencies largely deferred to Congress on digital asset policy. Now, with just one Senate-confirmed commissioner at the helm since December, Selig has directed CFTC staff to develop rules that could bring both registered and currently unregistered crypto exchanges under direct CFTC oversight. This move would leverage current legal authorities rather than waiting for new legislation—an approach that could see formal rule proposals emerge before the end of 2024 if Senate gridlock continues.
The micro-contrast here is stark: while President Donald Trump met with Coinbase CEO Brian Armstrong and other industry leaders at the White House on Wednesday to urge passage of a “fair version” of the Clarity Act, Selig was simultaneously preparing his agency to act independently. The SEC also entered the fray this week by proposing its first crypto-specific rulemaking—Regulation Crypto Assets—which would allow certain offerings of up to $5 million over four years or $75 million annually without full SEC registration. Yet despite these parallel efforts from regulators and political leaders, legislative progress remains elusive.
Agency Eyes Developer Protections, Next Steps
At Thursday’s Innovation Advisory Committee meeting—the agency’s inaugural session—Selig specifically tasked staff to explore developer protections and policies addressing leveraged or margined trading of crypto assets. have immediate implications for both established players and startups: entities not currently registered with the CFTC may soon find themselves subject to new compliance requirements if they offer leveraged crypto trading products.
According to decrypt.co, Selig emphasized that if Congress remains stalled, he will formally direct staff to propose rules codifying a CFTC market structure for digital assets. The committee also discussed artificial intelligence and prediction markets; under Selig’s leadership, the CFTC has asserted “exclusive jurisdiction” over event contracts by treating them as swaps—a move signaling broader ambitions in digital asset oversight.
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Senate Gridlock Spurs Regulatory Muscle Flex
The lack of legislative momentum stands in contrast to rapid developments within agencies. On Tuesday—the same week as Selig’s remarks—the SEC unveiled its own draft rules for crypto assets, aiming to create a conditional safe harbor and preempt certain state securities requirements. Meanwhile, Selig’s directive could bring clarity faster than congressional action: should staff move quickly, proposed regulations might surface before senators even reconvene in September.
Still, uncertainty lingers over how far these agencies can go without explicit congressional authorization. While Selig’s proactive approach may address some gaps left by stalled legislation, it remains unclear whether courts or lawmakers will ultimately support such moves if challenged by industry groups or rival regulators.
Next steps
If the Clarity Act fails to secure the 60 Senate votes needed when Congress returns in September, CFTC Chairman Michael Selig has directed staff to formally propose new crypto regulations using existing agency authorities, which would immediately initiate the process of bringing both registered and unregistered crypto exchanges under CFTC oversight.