SEC and CFTC Build Crypto Rules as Congress Stalls on CLARITY Act
Regulators Move Forward Without Congressional Blueprint
The US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have pushed nine crypto regulatory actions since August 18, building market infrastructure even after Congress failed to pass the CLARITY Act. The Senate rejected a key procedural vote on the bill on September 15 by a 49-50 margin, with 60 votes needed to advance it.
The most recent move came on October 1, when the SEC proposed a custody framework that would let investment advisers and regulated funds hold cryptocurrency under rules designed specifically for it. Chairman Paul Atkins called it a compliant custody path that did not exist before.
What Works Now and What Remains Pending
- Four measures are usable today: the SEC Innovation Exemption, CFTC relief for passive software providers, a CFTC FAQ update, and Coinbase Clearing LLC's registration as a derivatives clearing organization.
- Three measures remain proposals that need final rules: the SEC Regulation Crypto Assets offering framework, the transfer-agent proposal, and the custody proposal.
- The SEC issued FAQs on September 25 and updated them on September 28, explaining how staff views investment-contract analysis for projects.
- The CFTC's market framework, titled "Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets," went to White House review on September 17. Its contents remain unpublished.
Key Regulatory Milestones
On September 17, the SEC granted its Innovation Exemption, a five-year conditional rule allowing qualifying venues to trade tokenized stocks through permissioned automated market makers and liquidity pools. Certain liquidity providers also received conditional dealer relief. This exemption is live but temporary and limited to tokenized stocks.
Also on September 17, CFTC staff took a no-action position covering passive software providers that connect users to registered futures firms and markets. The relief sits below a formal Commission rule in legal weight, according to the report.
On September 28, the CFTC registered Coinbase Clearing LLC as a derivatives clearing organization permitted to clear fully collateralized futures, options on futures, and swaps. This marks the first time regulated crypto-native infrastructure has reached the clearing layer.
The Gap Left by Congress
The CLARITY Act would have allocated authority between the SEC and CFTC and set market-wide rules for secondary trading of digital commodities. That task now remains with Congress. Atkins said on August 18 that legislation remained "indispensable" for rules that outlast a future administration.
The March interpretive release from the SEC and CFTC explained how securities laws apply to certain crypto assets, but the broader regulatory boundaries between the two agencies remain unresolved.
What This Means for Bitcoin Investors
Custody rules, adviser access, ETF flows, derivatives routing, and clearing connections directly affect Bitcoin. The custody proposal, if finalized, would permit self-custody in certain circumstances, recognize state trust companies as custodians, and give regulated funds access to a wider range of crypto strategies.
However, several key provisions remain conditional until final rules are adopted. The Innovation Exemption runs for only five years, meaning institutional growth could be exposed to reversals if the rules are not made permanent.
Sources
Newisty Editorial Team covers technology, cryptocurrency, digital products, online platforms, developer tools and the wider digital economy. Our content is researched from official sources, company announcements, public documentation, market data and other primary or reputable sources. Articles are reviewed and edited before publication for clarity, accuracy and useful context.