6 minute read | October.02.2026
On September 15, 2026, the Digital Asset Market Clarity Act failed to advance in the Senate. With the bill’s ultimate fate now uncertain, near-term attention has shifted to the Securities and Exchange Commission and the Commodity Futures Trading Commission, where regulators are building an interim regime under existing authority.
The CLARITY Act proposed to establish a comprehensive federal market-structure framework for digital assets, similar to what the 2025 GENIUS Act did for payment stablecoins. Its central feature is a statutory division of jurisdiction.
The CFTC would take primary responsibility for “digital commodities” and the spot markets and intermediaries that trade them, while the SEC would retain authority over digital securities and certain primary-market transactions. The bill was designed to preempt a range of state regulatory requirements for activities falling within the federal framework.
The House passed the bill (H.R. 3633) on July 17, 2025 by a bipartisan vote of 294–134.
The Senate failed to invoke cloture on the motion to proceed – a preliminary procedural step ending debate – by a vote of 49–50, short of the 60 votes needed to take up the bill.
The primary obstacles to passage were disputes over ethics provisions related to federal officials’ crypto holdings and over stablecoin yield, including concerns that yield-bearing stablecoins could draw deposits away from banks. Senator Tillis (R–NC) voted no so that he could enter a motion to reconsider, which preserves a path to revive the bill. With the Senate calendar shortened by the November midterm elections; however, passage during this Congress is now widely viewed as unlikely.
With Congress stalled, the CFTC is moving forward under its existing authority. On September 17, two days after the failed Senate vote, the CFTC submitted a rulemaking titled “Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets” (RIN 3038-AF80) to the Office of Information and Regulatory Affairs for review. Because the submission is at the prerule stage, the text is not yet public. A formal proposed rule, notice and comment are still to come.
In August, Chairman Michael Selig said that new rules could create a new type of designated contract market, a “crypto asset market,” through which current registrants and currently unregistered crypto exchanges could offer leveraged or margined crypto trading under CFTC oversight.
Even if the CFTC adopts comprehensive digital asset rules, agency rules are not equivalent to legislation. They are more vulnerable to judicial challenge and reversal by a future Commission or administration. A durable framework ultimately requires Congressional action.
The CFTC’s rules will likely build on the Joint Interpretation issued by the SEC and CFTC on March 17, 2026. The Joint Interpretation addresses how the federal securities laws apply to crypto assets, and the CFTC stated that it and its staff will administer the Commodity Exchange Act (CEA) consistent with it.
The Joint Interpretation establishes a five-part taxonomy of crypto assets:
Categories (i)–(iii) are not securities, and category (v) digital securities falls squarely within the definition. Within category (iv), payment stablecoins under the GENIUS Act are excluded from the definition of a security by statute, and the Joint Interpretation also treats “covered stablecoins” addressed in prior SEC staff guidance as non-securities.
Other stablecoins must be assessed based on their characteristics. Although non-security crypto assets generally fall outside the SEC’s primary jurisdiction, they may still be subject to the securities laws if they are sold in an investment-contract transaction. Non-security crypto assets will generally be commodities under the CEA, subject to the CFTC’s anti-fraud and anti-manipulation authority.
In addition, the SEC’s August 18, 2026 proposed Regulation Crypto Assets remains open for public comment until October 20, 2026. The proposal would create two exemptions from Securities Act registration for investment contracts involving crypto assets, paired with a principles-based disclosure regime, along with a conditional safe harbor from the definition of “investment contract” and preemption of state securities registration and qualification requirements for offerings under the exemptions.
CFTC staff also continue to fill gaps through informal actions. Most recently, on September 24, 2026, the Market Participants Division, Division of Market Oversight and Division of Clearing and Risk updated their FAQs on crypto assets and blockchain technologies to address investment of customer funds in tokenized forms of permitted investments and the use of blockchain technology to satisfy recordkeeping requirements. The original FAQs, issued March 20, 2026, addressed the use of crypto assets as margin collateral.
Agency rulemaking also cannot deliver the broad state-law preemption the CLARITY Act was designed to provide. There are exceptions. Leveraged or margined trading on a CFTC-designated crypto asset market would fall within the CFTC’s exclusive jurisdiction under the CEA, although the reach of that preemption is likely to be contested.
If adopted, the SEC’s Regulation Crypto Assets would preempt state securities registration for exempt offerings. Outside those areas, state requirements, including money transmitter licensing, virtual currency licensing regimes, securities registration and consumer protection laws, will continue to govern operations for crypto businesses operating across multiple state jurisdictions. This is particularly true for unleveraged spot trading and custody.
We will continue to monitor developments with the CLARITY Act and relevant agency rulemakings. For questions about how these developments affect your business, we are happy to discuss.
Jasmynn Cobb (Associate) also contributed to this article.