CFTC Readies Crypto Rules as CLARITY Act Stalls

The CLARITY Act is intended to establish a US market structure for digital assets and clarify how oversight is divided between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Its fate matters to token classification, trading-platform supervision and compliance obligations across the crypto industry. Supporters view legislation as a more durable way to end years of uncertainty over which agency governs different parts of the market.

With the bill’s prospects of passage fading, the SEC and CFTC are moving to develop crypto rules under their existing authorities. Industry experts caution that agency regulations would offer less lasting certainty than an act of Congress because a future administration or reconstituted commission could reverse them, while courts could also narrow or invalidate the measures. The emerging CLARITY-free approach may provide near-term guidance but leave companies exposed to another shift in US policy.

The Digital Asset Market Clarity Act would divide oversight of digital assets between the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission, while establishing federal rules for token issuers and trading venues. The House passed the measure 294-134 on July 17, 2025. Its fate matters because legislation would provide a more durable framework for the industry than agency interpretations that can shift between administrations.

Bernstein warned on Aug. 3, 2026, that failure to enact the Clarity Act this year could trigger another leg lower in crypto valuations as the market loses a key policy catalyst. Prediction-market odds had fallen to 31%, with the Senate approaching its recess around Aug. 7. The broker said a legislative defeat would nevertheless push the SEC and CFTC to accelerate rulemaking under Project Crypto, leaving regulators, rather than Congress, to drive the next phase of U.S. crypto oversight.

US prediction markets have expanded rapidly, intensifying a jurisdictional fight over event contracts offered by platforms including Kalshi and Polymarket. Commodity Futures Trading Commission Chair Michael Selig maintains that such contracts are swaps under the agency’s exclusive authority, while several states have pursued lawsuits tied to sports wagering. The debate carries added weight because Selig is the CFTC’s only Senate-confirmed commissioner, leaving a regulator normally led by a five-member panel facing questions about its capacity and enforcement resources.

At a July 21, 2026, hearing of the House Agriculture Committee’s Subcommittee on Commodity Markets, Digital Assets, and Rural Development, Katten Muchin Rosenman partner Carl Kennedy said the CFTC was too short-staffed to oversee the sector fully. Kennedy said the Senate’s pending Digital Asset Market Clarity Act could provide additional authority, but argued that Congress should also supply resources for digital assets and prediction markets. Republican senators are seeking a vote before the August recess and said updated bill text would be released soon.

U.S. cryptocurrency oversight has long remained murky, with the Commodity Futures Trading Commission and Securities and Exchange Commission vying for the lead role. The CLARITY Act before Congress seeks to establish clear market-structure rules and resolve enforcement disputes once and for all. Its passage will directly affect whether the United States retains influence over the global digital-asset financial system and prevents domestic companies from moving abroad because of regulatory uncertainty.

CFTC Acting Chairman Selig recently warned that regulators would write their own rules to fill the legal void if Congress fails to pass the CLARITY Act before its August recess this year. He said such an outcome would cost the United States its authority to set cryptocurrency rules and force U.S. companies to operate under overseas frameworks such as the European Union’s Markets in Crypto-Assets Regulation, or MiCA.

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 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.