How Crypto Stopped Waiting for Congress and Learned to Love the Regulators

The Senate's inability to move the Clarity Act has redirected responsibility for shaping crypto market rules from Congress to federal regulators. The procedural vote in the Senate fell 11 votes short of the 60 needed to advance, and Senate lead sponsor Cynthia Lummis said the bill was effectively dead for the year. Rather than wait for a legislative fix, multiple agencies moved to fill the gap. The SEC was first to act, unveiling an innovation exemption aimed at tokenized U.S. stocks that would let eligible trading venues operate on-chain without registering as national securities exchanges. The agency framed the move as internal rulemaking to govern tokenized securities in the absence of a legislative framework. The CFTC followed with a two-pronged approach: staff issued a no-action position that permits passive software providers, including wallet apps, to give users access to regulated derivatives without registering as introducing brokers, and a broader crypto-markets rulemaking was forwarded to the White House for review. The Federal Reserve also entered the field, proposing rules for stablecoin issuers it supervises that would require stablecoins to be fully backed by safe, liquid assets and for issuers to hold capital against operational risks. Those proposals are part of the multi-agency implementation of the GENIUS Act, the stablecoin law signed in 2025; the Office of the Comptroller of the Currency is likewise racing to finalize its stablecoin rules by November to meet a statutory January deadline. Industry leaders have largely accepted the regulatory route as the current viable path to clarity. Kristin Smith, president of the Solana Policy Institute, said the sector is now looking to regulators for guidance. However, agency rulemaking carries trade-offs: rules developed by agencies can take longer to finalize, are more readily challenged in court, and may be reversed or altered by a different administration, leaving long-term legal and policy uncertainty for market participants.