SEC and CFTC Poised for Aggressive Rulemaking After CLARITY Act Collapse

Legislative Dead End Forces Regulators Back to Their Own Playbooks

The CLARITY Act is dead – at least for now. After the bill’s cloture vote failed on Tuesday, the path to a negotiated congressional framework for digital asset regulation closed, leaving the Securities and Exchange Commission and the Commodity Futures Trading Commission to fill the void on their own terms. According to research firm Bernstein, both agencies are now expected to move aggressively on new rulemaking to make up for the time spent waiting on legislation that never materialized.

That shift carries real consequences for crypto markets and the companies operating within them. Regulatory direction coming from agency rulemaking – rather than statute – tends to be narrower, faster, and far more vulnerable to legal challenge. The failure of the CLARITY Act doesn’t mean less regulation. It means regulation drafted without the guardrails that Congressional negotiation typically provides.

What the CLARITY Act Was Supposed to Do

The CLARITY Act was designed to draw clearer jurisdictional lines between the SEC and the CFTC over digital assets – a boundary dispute that has defined, and complicated, crypto enforcement in the United States for years. The SEC has historically claimed authority over assets it deems securities, while the CFTC has jurisdiction over commodities and their derivatives. Most major cryptocurrencies sit in an ambiguous middle ground that both agencies have, at different times, tried to claim.

Congressional legislation like the CLARITY Act offered a rare opportunity to settle that dispute through statute – giving both agencies defined lanes, and giving crypto firms something they have long lacked: legal certainty about who they’re actually accountable to. The cloture vote failure removed that possibility from the immediate table. Getting a bill through a cloture vote requires 60 Senate votes, a threshold the CLARITY Act could not clear.

With that door closed, the SEC and CFTC revert to the tools they already have – and Bernstein’s analysis suggests both agencies intend to use them. Rulemaking authority allows federal regulators to publish binding regulations through a notice-and-comment process without waiting for Congressional approval. It’s slower than an executive order but carries legal weight, and both agencies have substantial rulemaking powers they have so far deployed unevenly across the digital asset space.

Why “Aggressive” Rulemaking Looks Different for Each Agency

For the SEC, aggressive rulemaking likely means accelerating efforts to define which digital assets qualify as securities – and then building compliance frameworks around that definition. Chair Gary Gensler has consistently argued that most cryptocurrencies already fall under existing securities law, making new legislation unnecessary. The CLARITY Act’s failure, from the SEC’s perspective, may reinforce that position rather than weaken it.

The CFTC faces a different calculation. The agency has historically had a lighter regulatory touch on spot commodity markets and has, at times, positioned itself as a more crypto-friendly alternative to the SEC. But Bernstein’s expectation of aggressive rulemaking from the CFTC suggests the agency may now move to formally assert jurisdiction over digital commodities – particularly Bitcoin and Ethereum, which many in the industry have long assumed would fall under CFTC oversight. That assumption has never been codified. Rulemaking could begin to change that.

The Cost of Lost Time and a Narrow Path Forward

Bernstein’s framing specifically notes that both agencies are moving to compensate for time lost during CLARITY Act negotiations. That framing matters. Regulatory agencies don’t operate in a vacuum – they respond to political calendars, court decisions, enforcement priorities, and the volume of complaints and applications sitting on their desks. The months spent in legislative limbo waiting for a bill that stalled represent a backlog both agencies now need to address.

For crypto companies that had been hoping Congressional action would produce a friendlier or at least more predictable regulatory environment, the shift to agency rulemaking is unwelcome. Rules written by the SEC without Congressional constraints tend to reflect the agency’s existing interpretive positions – which have not, historically, been favorable to crypto. And unlike a statute, agency rules can be challenged in court, creating an environment where compliance becomes a moving target as legal battles play out over years.

There is a narrow scenario where this produces something useful. If the CFTC moves quickly to assert formal jurisdiction over Bitcoin and Ethereum as commodities, it could create a clearer operating environment for exchanges and trading platforms dealing primarily in those assets. Firms that have structured their businesses around CFTC-regulated futures products may find themselves with a more stable regulatory footing than those operating in the SEC’s broader securities perimeter. The divergence between those two groups could become sharper, and more consequential, in the months ahead.

What remains unresolved is whether aggressive rulemaking from two separate agencies – pulling in different directions, using different legal authorities, and responding to different political pressures – produces anything resembling coherent policy. The CLARITY Act, whatever its flaws, at least attempted to answer that coordination problem through a single piece of legislation. Without it, the SEC and CFTC may simply be competing to regulate an industry that needs, more than anything else, to know which regulator it’s actually dealing with.

Bernstein’s Tuesday note doesn’t predict what specific rules will emerge – only that they’re coming, and coming faster than the industry may have anticipated after watching the legislative effort collapse. Whether the courts or a future Congress ultimately override whatever both agencies publish is a separate question entirely. For now, the agencies have the field.