CFTC Chair Warns Regulators Will Write Crypto Rules if CLARITY Act Fails

The CLARITY Act aims to create the first federal market regulatory framework for U.S. digital assets, chiefly by defining the respective jurisdictions of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC). If enacted, the bill would affect token classification, trading-platform compliance and investor protection. It is also a key part of the Trump administration’s effort to institutionalize cryptocurrency policy.

White House crypto adviser Patrick Witt said officials were pushing to complete the legislation by July 4, 2026. The Senate Banking Committee is expected to hold a markup in May before sending the bill to the Senate floor in June. However, four disputed issues — including stablecoin yield mechanisms and ethics provisions for public officials — still require a bipartisan compromise. The estimated chance of passage has fallen below 50%, while one reporter said the legislative process could make meeting the deadline difficult.

The US Congress is considering the CLARITY Act, which seeks to clarify regulatory responsibilities for digital assets and trading platforms and reduce legal uncertainty for crypto companies. Senator Cynthia Lummis says clear rules are critical to bringing businesses back to the United States and preserving the country’s leadership in financial technology.

Lummis warned that this week could be the United States’ last critical opportunity to advance the CLARITY Act before 2030. She said China could otherwise write the rules for a new financial era. Negotiations have continued since the Senate returned, but Democrats and Republicans remain divided over provisions covering lawmakers’ ethics and safeguards against bad actors. A vote on crypto market structure could take place as early as August.

US crypto assets have long been overseen separately by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), with no clear line determining whether a token is a security or a commodity. The Digital Asset Market Clarity Act aims to delineate the agencies’ responsibilities, reduce regulatory uncertainty for the industry and cement US leadership in setting global rules for crypto finance.

US Treasury Secretary Scott Bessent recently urged Congress in an opinion piece to pass the bill this summer. The House approved it by a 294–134 vote on July 17, 2025, but it still awaits Senate action. The White House had pushed to complete the legislation by July 4, while prediction markets currently put its chance of passage this year at about 70%. Bessent also said the Strategic Bitcoin Reserve is moving forward cautiously.

The U.S. Congress is considering the Clarity Act, which would expand the Commodity Futures Trading Commission’s authority over digital asset markets. Brookings Institution fellow Aaron Klein said shifting responsibilities without a corresponding increase in enforcement resources would undermine investor protection and market order.

Klein warned that regulation could become little more than a formality if Congress grants the CFTC new powers without providing adequate funding and staff with digital asset expertise. Reports did not specify the additional budget, staffing levels or a firm timetable for deliberations, making the bill’s eventual resource allocation critical to its effectiveness.

The U.S. Commodity Futures Trading Commission (CFTC) has long regulated derivatives, but a regulatory gap remains in the cryptocurrency spot market. With the industry’s market capitalization at $3 trillion, whether Congress expands the CFTC’s authority will shape oversight of trading platforms and token issuers, as well as investor protections.

CFTC Chair Michael Selig said in a statement marking his first 100 days in office that the agency was ready to oversee the entire cryptocurrency market and would adopt a more permissive enforcement policy for digital assets. He also reiterated that the CFTC is the sole regulator of prediction markets and opposed intervention in the sector by other regulators.