SEC Prepares for Clarity Act Stalemate with Fallback Rulemaking

SEC Chair Paul Atkins has warned that if the Clarity Act stalls in Congress, the agency will set its own crypto rules. The bill, which aims to clarify regulatory jurisdiction over digital assets, has lost momentum after clearing the House and Senate Banking Committee earlier this year.

The Clarity Act would give the CFTC exclusive jurisdiction over spot digital commodity markets, effectively moving most tokens outside the SEC's regulatory reach. However, some Senate Democrats object to ethics provisions covering officials' crypto dealings, arguing that the current language does not go far enough.

Atkins has reiterated his support for the bill and expects Congress to pass it eventually. In the meantime, the SEC has already assembled a fallback framework through Project Crypto, which includes a Regulation Crypto rulemaking package. This package covers token registration exemptions, custody standards for digital assets, and proposes a safe harbor for projects moving toward decentralization.