Yesterday, the Senate held the long-awaited vote on the CLARITY Act and failed to advance it. Today, the conversation had already shifted to what comes next.
Until this week, the industry had been focused on getting a comprehensive market-structure bill through Congress. With that path stalled for now, attention is shifting to what the SEC and CFTC can do under their existing authority.
I talked with Charley Cooper, President of Ava Labs and former CFTC Chief of Staff and Chief Operating Officer, at the Avalanche Summit today. “I can only speculate because I wasn’t in the room,” he said about the failed vote, “but I think there were multiple issues that came into play.” He cited concerns about yield-bearing stablecoins and the difficulty of moving partisan legislation in a midterm year. The result, he said, “wasn’t a surprise.”
Cooper expects the agencies’ existing rulemaking push to take on greater importance, but cautions on timing: “You’re probably looking at… six-plus months before you really begin to see these rules being done in earnest.” Still, he rejected the idea that the industry should wait. “The failure of the CLARITY Act to pass does not mean there’s a set of things we’re not allowed to do in crypto,” he said. “As an industry, we cannot sit on our hands waiting for permission to do things. That’s how industries die, and I can tell you crypto is well out of the box.” Avalanche itself, he added, is not changing course and will meet clients “where their risk tolerance takes them.”
Both regulators signaled Wednesday that they intend to move ahead. SEC Chairman Paul Atkins said that “with or without legislation, we will act decisively within the SEC’s statutory authority to deliver certainty for American investors and for the entrepreneurs shaping our technological future.” The SEC had already proposed Regulation Crypto Assets in August, a framework for certain investment contracts involving crypto assets.
CFTC Chairman Michael Selig was similarly explicit after the Senate vote. He said the agency would work “using our existing statutory authorities,” adding that the CFTC is “locked in and ready to ship its rules for the new frontier of finance.” The CFTC and SEC have already been coordinating through Project Crypto, including a joint interpretation issued in March clarifying how federal securities laws apply to certain crypto assets.
Agency action, however, does not carry the same permanence as legislation. Atkins acknowledged this limitation in August, calling legislation “indispensable” to creating rules that cannot easily be reversed by a future regulator.
That message was reinforced on stage during the summit’s CLARITY Act panel. Representatives from the Digital Chamber, Blockchain Association, Crypto Council for Innovation, and DeFi Education Fund described the vote as a setback rather than a terminal failure. Many of the policy issues had already been worked out with congressional staff before political disputes took over in the final hours. The panelists pointed to the conflict over ethics as one remaining obstacle and said developer protections under the Blockchain Regulatory Certainty Act had also become politically contentious.
The industry is expecting the SEC and CFTC to move quickly with their existing rulemaking efforts. With little time left before Congress leaves in early October, agency action is seen as the more likely near-term path. The lack of legislation may slow real-world-asset tokenization and other institutional projects, but the work will continue either way.