U.S. crypto regulation is advancing despite Congress failing to pass comprehensive market structure legislation. The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) have taken steps to address regulatory gaps using their existing authority. Their recent actions and proposals cover token offerings, tokenized stocks, crypto custody, and certain leveraged transactions, but differ in legal status and practical effect.
The shift follows the Senate’s September 15 vote on the CLARITY Act, which failed to advance the legislation. Senators voted 50-49, falling short of the 60 votes needed for the relevant procedural step. The result stalled progress at that stage, rather than establishing the final fate of the bill. The legislation sought clearer boundaries between securities and commodities regulators. Without a new statute, both agencies must continue working within their existing authority.
That approach may offer companies near-term regulatory pathways, although it cannot replace every provision of a new federal law. Investors and businesses must distinguish measures already in effect from proposals, conditional relief, and consultations that still require further action.
SEC Measures Give Crypto Businesses More Regulatory Options
In August, the SEC proposed Regulation Crypto Assets, targeting certain investment contracts involving digital assets. The proposal outlines two potential exemptions from traditional securities registration. One would cover offerings of up to $5 million over four years, while another would permit up to $75 million during each twelve-month period.
These thresholds are part of a proposal, not exemptions that issuers can automatically rely on as finalized rules. Issuers would still need to provide disclosures and comply with applicable federal antifraud protections. The proposal also outlines conditions under which an asset could cease to be treated as part of an investment contract. However, the SEC has not finalized these provisions, and the requirements could change after public review.
The commission made a separate move on September 17 by issuing an innovation exemption for qualifying venues to trade certain tokenized U.S. stocks through permissioned blockchain trading pools. The relief is conditional and limits trading volumes, eligible securities, and venue operations. Importantly, holders must retain rights equivalent to those attached to conventional shares, subject to the conditions of the order.
The order also provides qualifying liquidity providers with limited relief from dealer registration. Issuers can object before unaffiliated parties introduce tokenized versions of their stocks. The exemptions are scheduled to expire five years after publication unless the SEC takes further action. The order’s specific eligibility conditions and scope determine which venues and transactions can rely on the relief; it is not a general authorization for all tokenized-stock trading.
Then, on October 1, the SEC proposed updated custody requirements for registered advisers and investment funds. The changes would allow state trust companies to safeguard certain crypto assets under specified conditions and permit self-custody in limited circumstances. These are proposed changes, not blanket permissions for all custodians or investment firms. Public comments remain open until December 7, leaving the final regulatory details unresolved.
CFTC Turns to Leveraged Crypto Transactions and Trading Venues
The CFTC followed on October 5 with an advance notice of proposed rulemaking. Chairman Michael Selig outlined plans to explore a federal framework covering certain retail crypto commodity transactions involving leverage, margin, or financing under the Commodity Exchange Act.
The agency also sought feedback on a possible registration category called crypto asset markets. The category is under consideration, not an established regulatory classification. If adopted through a subsequent rulemaking process, it could create tailored requirements for qualifying platforms. The consultation also seeks recommendations on preventing abusive practices and applying established compliance standards.
For now, the CFTC is gathering information rather than imposing a finalized framework. Exchanges therefore cannot treat the notice as general permission to offer every crypto product nationwide. Any binding requirements would depend on subsequent agency action and the applicable legal framework.
The SEC and CFTC have also taken steps toward greater coordination on crypto oversight. In March, the agencies issued an interpretation addressing how securities laws apply to several categories of digital assets. That document provides a framework for understanding the agencies’ positions, but its precise implications depend on the assets and activities covered. Coordination may help clarify overlapping responsibilities, although it does not by itself eliminate regulatory uncertainty or establish that conflicts have been resolved.
Agency Decisions Face Limits Without a Law From Congress
The central issue concerns each regulator’s statutory authority. The SEC oversees securities markets, while the CFTC has broader authority over derivatives than over ordinary spot commodity trading. Neither agency can independently rewrite the division of responsibilities established by Congress.
Courts can also examine whether regulators have exceeded their authority or failed to follow required procedures. Furthermore, new agency leaders may reconsider earlier interpretations, exemptions, and proposed rules. Those possibilities complicate long-term planning for exchanges, custodians, and token issuers.
SEC Chairman Paul Atkins acknowledged the issue in August, saying congressional legislation remained necessary to establish rules durable enough to withstand changes in regulatory leadership. As a result, regulatory flexibility and legal permanence remain separate questions.
Companies now have signals about several potential compliance pathways, but the rules differ by activity, eligibility, and development stage. Some measures provide conditional relief, others remain proposals, and the CFTC’s latest initiative is still at the consultation stage. Congress retains the authority to establish a broader statutory framework for U.S. crypto markets.