It did not take long for U.S. financial regulators to attempt to compensate for a failed Clarity Act, although actions taken by the Securities and Exchange Commission and the Commodity Futures Trading Commission might not serve as an exact replacement.
SEC Chairman Paul Atkins has repeatedly asserted that his agency required legislative backing for its initiatives, yet no such law was enacted.
Certainly, the Clarity Act is dead, at least for the present moment. Most cryptocurrency enthusiasts understood this outcome as a major disappointment for the industry. However, how many truly comprehended the actual functions of the legislation?
The Digital Asset Market Clarity Act represented Congress’s latest iteration of a recurring concept spanning several years: establishing definitions for various types of cryptographic assets and associated tokens while explicitly designating the regulatory authorities governing them.
Throughout much of its presence in the United States, the industry clashed with entities like the U.S. Securities and Exchange Commission regarding the permissible operations of platforms such as Coinbase and Kraken, alongside debates over whether token issuance legally mirrored security offerings. The environment grew contentious, marked by numerous enforcement proceedings, costly settlements, and dramatic events, often featuring former SEC Chair Gary Gensler. (Allowing a moment for crypto participants to express disapproval.)
The Clarity Act would have resolved these ambiguities while granting the SEC’s sister organization, the Commodity Futures Trading Commission, expanded powers—most notably complete supervisory jurisdiction over crypto commodity spot markets. Spot markets facilitate direct commodity exchanges, and since bitcoin BTC $81,269.44 and Ethereum’s ether ETH $2,636.03 were eventually classified as commodities, it became apparent that the majority of digital asset trading occurs within an arena lacking hands-on supervision, barring circumstances involving malicious market manipulation.
This friction remains distinctly American because the domestic regulatory framework established separate bodies for securities and derivatives, contrary to unified models found in other jurisdictions. (Everyone acknowledges the unnecessary complexity.) Consequently, identifying the appropriate supervisory body for each asset has presented a hazardous challenge from the outset.
Categorizing blockchain-native assets and assigning oversight responsibilities formed a foundational element of the Clarity legislation. Furthermore, the bill incorporated numerous measures designed to mitigate illicit financial activities. Additionally—within a particularly controversial domain—it sought to provide limited legal safe harbors for decentralized finance (DeFi) software creators, shielding them from prosecution regarding external applications of their code.
We will skip discussing the specific clauses that ultimately defeated the bill, which bore little relation to its primary objectives. Instead, we examine developments within the policy vacuum left by the Clarity Act. Thanks to the SEC, minimal waiting time was required.
The sector does not find itself entirely back at the starting line following the failure of Clarity. Consider Exhibit A: the SEC. The securities oversight body operates under leadership selected by crypto-friendly President Donald Trump, with SEC Chairman Paul Atkins prioritizing digital asset regulations upon taking office. With Clarity stalled, he perceives an obligation to construct alternative measures wherever feasible.
Before observers could verify whether Clarity still had momentum, Atkins advanced a significant policy initiative two days later to establish a legitimate space in U.S. regulations for tokenizing securities, marking a cornerstone of the SEC’s updated digital asset strategy. Nevertheless, this represented neither the inception nor the conclusion of his agenda.
He and CFTC Chairman Mike Selig—a former crypto specialist at Atkins’ SEC—had previously initiated a collaborative digital assets initiative, beginning with a set of standards classifying how various assets would be handled, designated as a taxonomy. This constituted one of multiple staff-level policy endeavors offering moderate predictability for the sector, though these measures remain fragile since incoming leadership could readily modify them.
Atkins likewise commenced several structured procedures:
- The commission introduced its initial major crypto regulation last month, designed to set up Regulation Crypto Assets, establishing a framework for executing capital raises via token offerings without triggering excessive regulatory demands.
- During the previous week, the SEC introduced a specialized yet vital proposal enabling blockchain data to officially serve as an ownership record.
- The commission also approaches close to pursuing a proposed rule dictating how investment managers must maintain custody over digital properties.
As Capital Alpha policy analyst Ian Katz articulated, the SEC and CFTC are now positioned to accelerate aggressive, industry-supportive initiatives.
“The Republican leadership at those agencies will be able to pass regulations without Democratic approval,” he noted in a client advisory distributed following Clarity’s defeat. “Some of those proposals may come with an implied message to Democrats amounting to: This is what you get when you don’t legislate.”
The formal SEC crypto directives—steered by an all-Republican commission featuring two vacancies left by the White House—would demand substantial effort to repeal under future leadership appointed by a democratic administration, though they lack the permanence of statutory law. Atkins explained that the commission’s most recent prominent action regarding tokenization functions as a preliminary exercise intended to inform subsequent, more resilient policies, or potentially a future version of the Clarity Act.
Exhibit B demonstrating regulatory advancement during Clarity’s absence involves the CFTC, the smaller counterpart to the securities regulator. Chairman Mike Selig likewise capitalized on the post-Clarity void to pursue digital asset rulemaking, sending a proposal on crypto transactions and markets for White House review on Friday.
The CFTC—where Selig remains the sole active member among five commissioners, enabling unilateral action—has started in on rules governing prediction markets, a close relative of the digital asset sector. While broader crypto policy development is ongoing, the agency recently opened the door to crypto perpetual futures, known as perps.
Selig mentioned that his personnel are striving to apply a crypto asset market designation to entities comparable to the CFTC’s established classification of designated contract markets (DCMs).
Consequently, both the SEC and CFTC are pursuing numerous initiatives to construct a fragmented alternative to the provisions Clarity would have provided. Many of these measures will occupy tenuous legal ground and might fail to grant the industry its desired predictability. Furthermore, these policies remain vulnerable to judicial challenges arguing they lack statutory foundations, which could introduce additional delays if courts intervene.
In summary, Atkins repeatedly emphasized the necessity of the Clarity Act for specific reasons. As he put it in August, “Legislation remains indispensable to enacting ‘future-proofed’ rules of the road that are durable enough to protect the work we are undertaking today from being unwound by a future rogue regulator.”
While perceptions of a rogue actor may vary, Atkins has consistently expressed conceptual reservations despite his eagerness to advance current rules utilizing existing SEC authority. He previously characterized Congress’s role as indispensable.
During addresses delivered earlier this year and last year, he offered substantially similar future-proofing assessments: “Only Congress can future-proof regulation in this space.”
At the same time, he has repeatedly maintained that his institution can serve as a vital partner to legislative initiatives.
“What I envision aligns with legislation currently being considered by Congress and aims to complement, not replace, Congress’s critical work,” he remarked when launching his Project Crypto in November. Nonetheless, that project currently operates independently.
Originally published at https://www.coindesk.com/news-analysis/2026/09/18/clarity-act-we-hardly-knew-ye-we-look-at-what-was-in-the-bill-and-what-s-replacing-it.
