CLARITY Act Stalls in Congress as SEC Advances Crypto Rules

The CLARITY Act has stalled in Congress, but its fate is far from certain. Senator Jim Risch (R-ID) announced on August 8 that the Senate will start the process of passing the bill on September 15. The delay has put the bill in a 'walking dead' state, according to Bitwise Chief Investment Officer Matt Hougan.

The SEC's rulemaking agenda is gaining momentum as Congress continues to negotiate. SEC Chair Paul Atkins has indicated that regulators can pursue rules addressing many of the same CLARITY Act issues if Congress does not complete the legislation. The SEC's joint Project Crypto initiative includes work on token classifications and potential exemptions for certain onchain transactions.

Atkins outlined an interim approach in February, stating that the SEC and Commodity Futures Trading Commission (CFTC) intended to provide a regulatory bridge while Congress works on market structure legislation. Their joint guidance in March stated that most crypto assets are not themselves securities. The SEC's July regulatory agenda moves this regulatory bridge into specific policy areas, including crypto fundraising, custody, and tokenized securities.

The agency action can clarify how securities laws apply to crypto assets, establish exemptions, address custody, and create rules for securities-related onchain activity without waiting for Congress. Atkins has also described congressional legislation as the stronger way to future-proof U.S. crypto regulation.