The Senate’s failure to advance the CLARITY Act has put a major congressional effort to establish a comprehensive U.S. digital asset market structure framework on hold. On September 15, the Senate voted 49-50 against invoking cloture on the motion to proceed, leaving the legislation stalled for the time being.
That does not mean the regulatory agenda has stopped. The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) were already moving on digital asset regulation before the vote. On October 5, the CFTC issued its Advance Notice of Proposed Rulemaking (ANPRM) titled “Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets.” Comments are due December 14.
What changes when the immediate path shifts from legislation to agency action? And how should firms build when the direction of regulation may be getting clearer, even as the legal framework remains unsettled?
Dorothy DeWitt and Renato Mariotti discuss what comes next and what digital asset market participants should be thinking about now. DeWitt is founder and CEO of Tölt Strategies, former Director of the CFTC’s Division of Market Oversight and former General Counsel of Coinbase. Mariotti is a partner at Paul Hastings.
The following conversation has been edited for length and clarity.
At a high level, what changes now that the CLARITY Act has stalled?
Renato Mariotti: I think it changes the instrument through which change is going to occur more than it changes the direction. The commissions were already moving. The immediate implication is that they now have to carry much more of the load. At this point, I don’t think firms should be building their business plans around the assumption that Congress is going to solve this anytime soon. They need to be watching what the SEC and CFTC are actually putting forward and planning around that. The CFTC’s new advance notice under Chairman Selig gives the industry its first concrete look at a federal crypto exchange subcategory, the Crypto Asset Market, or CAM. It is not a proposed rule yet. The next step is a formal proposal, and I don’t expect a final rule before late 2027.
Dorothy DeWitt: I agree with that. But there’s also an important difference between an agency implementing a new law and an agency trying to make use of the authority it already has. If CLARITY had passed, the CFTC and SEC would have had a new statutory framework to implement. Without it, they still have to tie whatever they do back to the current Commodity Exchange Act (CEA) and the federal securities laws. So the agencies can provide more rules of the road, but they can’t simply create new and expanded jurisdiction that CLARITY would have done legislatively. The advance notice cleverly re-interprets certain provisions of the CEA.
Read the full Q&A at Traders Magazine
