If CLARITY Fails, the SEC and CFTC Take Over

The agencies have already built most of a market structure regime without Congress. Here is what they can do on 16 September, what they cannot do at all, and why that difference decides who keeps building in the US.

There is a version of the 15 September story that treats a failed cloture vote as a cliff edge. It is not. If the CLARITY Act does not clear the Senate, US crypto regulation does not revert to a vacuum, because two agencies have spent all of 2026 building a framework in parallel.

The SEC and CFTC have signed a memorandum of understanding, issued a joint interpretation of how securities law applies to crypto assets, proposed a tailored offering regime, and approved the first new derivative type in over a decade. Industry executives have been openly making the case that agency rulemaking can supply enough certainty to keep building in the absence of legislation.

That is broadly true. But there are three things the agencies cannot do no matter how motivated they are, and those three gaps are what a market structure statute exists to fill. Understanding which is which is the whole exercise.

What has already been built without Congress

The 2026 record is more substantial than most people following the legislative fight realise.

The taxonomy that quietly did most of the work

The single most consequential item on that list is the March interpretive release. It establishes four categories of asset that are not deemed securities — digital commodities, digital collectibles, digital tools, and payment stablecoins under the GENIUS Act — and it does so at Commission level rather than as staff guidance. Assets including Bitcoin, Ethereum, XRP, Solana, Cardano, Chainlink, Dogecoin and Avalanche were categorised as digital commodities.

The CFTC joined the interpretation and indicated it would administer the Commodity Exchange Act consistently with it. CFTC leadership has publicly agreed that many crypto assets trading in secondary markets are not securities, including tools, commodities and collectibles, even when originally sold pursuant to an investment contract.

The classification question that consumed a decade of litigation was answered by two agencies in a single release — without a statute.

Importantly, the interpretation does not replace the Supreme Court’s Howey test. It is an interpretation of how the agencies will apply existing law, not a new law. That distinction becomes the central weakness later in this piece.

The SEC playbook after a failed vote

The SEC has already shown its hand. On 18 August 2026 it proposed Regulation Crypto Assets, which would establish:

• A startup exemption permitting offerings of up to $5 million over a four-year period, with retail participation and general solicitation permitted.

• A larger fundraising exemption of up to $75 million per 12-month period, with financial statements and ongoing reporting obligations.

• A principles-based disclosure framework tailored to the issuer, the investment contract, the crypto asset and the underlying network rather than to conventional corporate securities.

• A conditional safe harbour addressing when a crypto asset ceases to be subject to an investment contract.

• Federal preemption of state securities registration and qualification requirements for qualifying offerings and certain secondary transactions.

The SEC has been explicit that this framework draws heavily on Congressional work, particularly the CLARITY Act. The regulator is implementing, by rulemaking, a version of the bill it is nominally waiting for. Chairman Atkins has framed the package as replacing a square-peg approach with fit-for-purpose rules under existing law.

If cloture fails, expect the comment file on Regulation Crypto Assets to become the main event in US crypto policy, and expect the SEC to move on custody, broker-dealer treatment and trading platform rules next.

The CFTC playbook after a failed vote

The derivatives regulator has been the more aggressive of the two. On 29 May 2026, the CFTC approved a perpetual contract referencing the spot price of Bitcoin for listing on a registered exchange. Chairman Michael Selig framed it as delivering on a commitment to onshore crypto perpetuals, arguing that the absence of a domestic pathway had pushed enormous volume offshore, fragmenting liquidity and disadvantaging US firms.

The approach has been deliberately incremental: leverage starting at reasonable levels rather than the extremes available offshore, and each new asset reviewed on its own submission rather than cleared automatically on the Bitcoin precedent.

The forward agenda is broader. The CFTC has signalled work on when DeFi software providers must register, updated rules for leveraged and margined spot trading, the status of perpetual derivatives, prediction market regulation, and how to treat AI-driven trading systems in digital markets — much of it coordinated with the SEC under Project Crypto.

The three things no agency can do

Here is where the optimism runs out.

1. Create spot market authority that does not exist

This is the big one, and it is a matter of statute rather than will. The Commodity Exchange Act limits the CFTC’s authority over spot commodities to anti-fraud and anti-manipulation jurisdiction. That is enforcement power, not regulatory power. It is fundamentally different from the principles-based oversight the agency exercises over futures, options and swaps and the intermediaries that facilitate them.

So the CFTC can pursue a spot market manipulator after the fact. It cannot build a registration, capital, custody, surveillance and customer-protection regime for spot digital commodity exchanges, because Congress has not given it one. Policy analysts have made the point bluntly: the largest gap in existing law is that nobody holds regulatory authority over commodity spot markets, and no chairman can conjure that authority into existence.

The commercial consequence is specific and underappreciated. Until a regulatory regime exists for commodity spot markets, banks are expected to remain reluctant to accept crypto as loan collateral — which keeps a large category of institutional balance sheet activity on the sidelines regardless of how friendly the SEC and CFTC become.

2. Bind their own successors

An interpretive release, a proposed exemption and a memorandum of understanding all share a defect: they can be withdrawn by the people who wrote them, or by the people who replace them. The MOU itself is discretionary in scope and does not create legally binding obligations or rights of action for market participants.

Regulation Crypto Assets is a proposal open to public comment; its final text may differ, and a future Commission can revisit it. Industry participants have made this point consistently: agency rules may lack the permanence of legislation and could be more easily changed by a future administration.

For a trading desk, that risk is manageable. For a five-year institutional allocation or a bank building crypto infrastructure into its core systems, it is not.

3. Fix the problems that sit outside their jurisdiction

Several of the issues the CLARITY Act was drafted to address are simply not within the SEC’s or CFTC’s reach:

• Developer exposure to unlicensed money transmission liability — a statutory question, and one of the reasons advocacy groups pushed to pair the Blockchain Regulatory Certainty Act with market structure legislation.

• The state-by-state licensing patchwork for custody and transmission, which sits with state regulators regardless of what federal agencies interpret.

• Bank Secrecy Act coverage of intermediaries and protocols, which the GENIUS Act addressed only at the issuer level.

• A statutory prohibition on a central bank digital currency, which the bill contains and no agency rule can supply.

The litigation problem

There is one further risk that rarely makes the headlines. A regime built on interpretation rather than statute is a regime built on contested ground.

The March joint interpretation explicitly does not replace the Howey test — it interprets it. Any market participant, state regulator or private litigant who disagrees with where the agencies drew the line retains the ability to argue that the agencies read the statute wrongly. The same is true of the OCC’s proposed rebuttable presumption on stablecoin yield, which resolves by rulemaking a question Congress left ambiguous.

Legislation is not immune to challenge, but it moves the argument from “did the agency exceed its authority” to “what does the statute mean” — a much narrower and more predictable fight.

Who wins and who loses in an agency-led market

What to watch after 15 September

1. Whether the CFTC formally opens rulemaking on leveraged and margined spot trading. It is the closest the agency can get to a spot regime under current authority.

2. The comment file and final text of Regulation Crypto Assets, particularly whether the safe harbour survives in a usable form.

3. New perpetual and derivative approvals. Each one is another piece of market structure built without a statute.

4. Whether any state regulator or litigant challenges the joint interpretation. The first case testing it will matter more than any speech.

5. Bank behaviour on crypto collateral. If banks stay out, that is the clearest evidence that agency action is not a substitute for legislation.

The bottom line

If the CLARITY Act fails on 15 September, the SEC and CFTC will fill most of the space. They have the appetite, the coordination machinery and a substantial head start. Day-to-day, very little changes for most crypto businesses on 16 September.

What does not get filled is the part that only Congress can fill: a genuine regulatory regime for spot digital commodity markets, and a framework durable enough to survive the next change of administration. Those two gaps are precisely what keeps conservative capital out.

So the honest framing is not “the agencies take over” versus “chaos”. It is that the United States would continue running a sophisticated, well-intentioned, entirely provisional crypto regime — while three other jurisdictions are handing out licences that do not expire with an election.

Sources

Reporting and primary materials from the US Securities and Exchange Commission, the Commodity Futures Trading Commission, the Office of the Comptroller of the Currency, the Congressional Research Service, American Banker, CoinDesk, CNBC and law firm regulatory analyses. This article is general information about public policy developments and is not legal, tax or investment advice.

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