Clarity Bill Bites the Dust 💸—Watch Regulators Eat Its Lunch

The collapse of the Digital Asset Market Clarity Act in the Senate has shifted U.S. crypto oversight to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), with both agencies rolling out new frameworks for tokenized trading, leveraged retail products and custody even as ordinary spot crypto trading remains without comprehensive federal rules. Executives and legal experts interviewed after the bill's failure described a regulatory landscape that will keep moving through agency action, though they disagreed on whether that approach can deliver the durable certainty Congress was meant to provide.

Lev Breydo, an assistant professor of law at William & Mary Law School, said the legislation exposed long-running rifts within the industry. "A coalition that looked unified against Gensler found out definitions create winners and losers," he said, referring to divisions over ethics provisions and the yield fight with community banks. He expects the SEC to continue work on offering and custody rules through 2027, building on the framework laid out in the agencies' March joint interpretive release and the tokenized-stock exemption introduced September 17.

Under that five-year "Innovation Exemption," qualifying venues can trade tokenized U.S. stocks through blockchain liquidity pools while the SEC drafts permanent rules. The CFTC followed on October 5 with a request for feedback on rules for leveraged retail crypto trading and a new registration category for crypto markets, launching a public comment process rather than imposing immediate requirements. On October 1 the SEC also proposed letting state trust companies safeguard client crypto and allowing advisers and funds to hold the assets themselves under certain conditions.

Industry executives told CoinDesk they see openings in the new framework for tokenization, decentralized finance and dealmaking, but cautioned that incumbent exchanges could keep their competitive edge as rules phase in. Lawyers said regulators' anti-fraud and anti-manipulation powers cover parts of the market, leaving the central gap unaddressed: closing that gap was a core aim of Clarity, and its absence means businesses will continue adapting to rules that may shift with political and legal challenges.