Comprehensive federal crypto regulation in the United States has failed to materialize through legislative channels. The Digital Asset Market Clarity Act officially stalled in the US Senate. Rather than waiting for Congress to reach an agreement, the two primary financial regulators, the SEC and the CFTC, have chosen to step in and fill the legal vacuum using their respective agency powers.
This unilateral move allows regulation to advance much faster, but leaves longstanding gaps untouched.
Fast Track for Tokenized Equities and Custody
The first major shift came on September 17 when the SEC issued a five-year Innovation Exemption rule. The policy permits qualified trading venues to trade tokenized US equities using blockchain liquidity pools while a permanent regulatory framework is developed.
Several major corporations moved quickly to take advantage of this regulatory relief. OKX and ICE, the parent company of the New York Stock Exchange (NYSE), have submitted plans to operate round-the-clock tokenized stock exchanges. Platforms such as Coinbase, Kraken, Binance, and Robinhood had already begun offering token-based stock trading to their users.
Just two weeks later, on October 1, the SEC unveiled a new custody proposal. The draft rule allows state trust companies to safeguard client crypto assets. In addition, investment advisers and funds would be permitted to self-custody crypto under specific conditions and criteria.
Who Benefits From the Fast-Track Approach
The CFTC followed the SEC’s lead on October 5 by opening a public comment period. The commodities regulator is seeking feedback on crypto leveraged trading rules for retail investors, as well as designing a new registration category for crypto exchanges. Unlike the SEC’s immediate exemptions, the CFTC proposal must still go through an extended public comment process before taking effect.
Nevertheless, institutional participants have welcomed the proactive stance from both regulators. Bitwise CIO Matt Hougan noted that the agency-led approach offers more tangible near-term benefits than waiting for congressional legislation that requires years of rulemaking. Bitwise also expects that regulatory clarity from the SEC will encourage more crypto protocols to implement token buyback or buy-and-burn mechanisms.
KBW head of digital assets Paul McCaffery shares a similar outlook. McCaffery noted that the proactive moves from the SEC and CFTC are beginning to spark a wave of mergers and acquisitions (M&A) across digital assets, traditional financial services, and fintech firms.
Unresolved Oversight Gaps
Yet the administrative measures by both agencies expose a fundamental issue. Plain spot crypto trading without leverage continues to operate without comprehensive federal oversight. Closing this regulatory gap in the spot market was the primary objective of the Clarity Act before it collapsed in the Senate.
The demise of the bill also highlights how fragile consensus is within the crypto industry itself. William & Mary law professor Lev Breydo highlighted the fragility of the political alliances that had formed. According to Breydo, a coalition that initially appeared united against former SEC Chair Gary Gensler fractured once legal definitions began determining winners and losers.
For crypto market participants, the agency route cuts through bureaucratic delays, but it rests on temporary rules and leaves unresolved gaps in the spot market.
Source: CoinDesk.
Read also: France Proposes 31.4% Stablecoin Swap Tax and Crypto Exit Tax - But Budget Stalls in Committee
Disclaimer: This article is for informational and educational purposes only, not financial advice. Cryptocurrency assets are highly volatile and carry significant risk. Always do your own research (DYOR) and never invest more than you can afford to lose.
