SEC and CFTC Forge Ahead on Crypto Regulation

The Senate's failure to pass the CLARITY Act has not changed the course of crypto regulation. The SEC and CFTC will continue to work within their existing legal authority to establish rules for the industry.

SEC Chair Paul Atkins stated that the agency would 'act with or without legislation' and remain within its statutory authority. The SEC's proposed Regulation Crypto Assets would create tailored exemptions for certain projects raising capital through crypto assets, establish a process for determining when an associated investment contract has ended, and provide safe harbor for projects selling an asset while promising to build a network, product, or service.

The CFTC's clearest route runs through leverage. The agency oversees commodity derivatives such as futures and swaps, along with certain retail commodity transactions involving margin, leverage, or financing. It can regulate parts of crypto trading without receiving new authority from Congress.