Legislature Fails, Agencies Take Over — America’s New Crypto Rules Before October 20

After the CLARITY Act stalled, the SEC took over the job lawmakers left undone with an exemption rule covering $75 million raises, while CFTC Chair Selig prepares the groundwork for mass tokenization and 24/7 trading at the Fed podium.

49-50: A Legislative Ending Hiding Behind One Vote

On September 15, 2026, the Senate held a procedural cloture vote on the Digital Asset Market Clarity Act (CLARITY Act, H.R. 3633), which ended with 49 votes in favor, 50 against, and one senator not voting — falling 11 votes short of the 60 needed to proceed. Notably, four Republicans voted against the motion, including Thom Tillis, who switched sides at the last minute to preserve the option of calling a new vote later.

The bill did not fail over a technical dispute about regulatory jurisdiction. It failed on two political battlefronts. First, Democrats argued that the president and his family’s crypto holdings, through memecoin and World Liberty Financial, lacked adequate constraints. CoinDesk estimated their crypto-related revenue at $1.4 billion in 2025. Second, banks lobbied jointly against the stablecoin yield provisions, warning that interest-bearing digital dollars would pull deposits out of the banking system. Two unrelated fights brought down a bill that carried high expectations.

The market reacted immediately on voting day: Bitcoin fell as low as $75,850 (down 4.2% in 24 hours), Coinbase fell 6.7%, and Circle fell 8%. Polymarket odds on passage had already collapsed from 30% to 14% before the vote. Senate Banking Committee Chair Tim Scott then said plainly: while legislation is absent, the rules should be set by the SEC and the CFTC.

Reg CA: A 60-Day Window for Fundraising, Not Exchanges

What will actually reshape the U.S. crypto fundraising landscape is the Securities and Exchange Commission’s Regulation Crypto Assets (Reg CA, Release 33-11434), proposed on August 18. The proposal was published in the Federal Register on August 21, starting a 60-day public comment period that closes October 20. SEC Chairman Paul Atkins called it “the most historic step yet to modernize federal securities regulations for crypto assets.”

The proposal builds a three-tier offering exemption regime. The lowest tier is Rule 200, the “startup exemption”: single offerings up to $5 million over a four-year period, no audit, no U.S.-entity requirement, but usable only once per asset family. The upper tier is a Regulation A-style two-tier fundraising exemption (Rules 300-307): Tier 1 up to $20 million per 12 months, Tier 2 up to $75 million per 12 months, limited to U.S.-organized issuers, with Tier 2 requiring two years of audited U.S. GAAP financials. The key relief: both tiers permit general solicitation, allow sales to retail investors, and the securities are no longer restricted.

The proposal also includes an investment-contract safe harbor (Rule 400): if an issuer has completed or permanently ceased the essential managerial efforts it represented, makes no new promises, and files a Form TR certification on EDGAR, the SEC will deem the investment contract to have ceased to exist and the token no longer subject to securities law. This is the first explicit administrative exit for “when a token leaves security status” since SEC v. Howey.

But Reg CA has clear boundaries. It does not touch the Exchange Act definitions of exchange, broker or dealer, does not address trading venues, custody or transfer agents, and does not cover tokenized securities. That is exactly the legislative territory of the CLARITY Act, and the legislation is dead. In Startupik’s framing: issuers have a rulebook to build against, while companies building trading infrastructure must keep navigating existing Exchange Act analysis, state money transmitter licensing, and the CFTC’s DCM path for at least another two years.

The CFTC’s Administrative Jigsaw: From Stablecoin Collateral to 24/7 Trading

A week after the legislative setback, CFTC Chairman Michael Selig delivered a clear judgment at the U.S. Treasury Market Conference hosted by the Federal Reserve Bank of New York on September 22: U.S. financial infrastructure must prepare for mass tokenization, blockchain adoption and 24/7 trading. He said blockchain and artificial intelligence could reshape markets more over the next decade than over several previous decades combined.

Selig’s remarks rest on a year of rulemaking groundwork. The CFTC has sought public feedback on continuous trading frameworks for energy derivatives, and in February it expanded eligible collateral to include stablecoins issued by national trust banks, meaning USDC and USDT are eligible to enter institutional derivatives settlement. Selig said the agency will keep evaluating how to support responsible stablecoin use by exchanges, clearinghouses and institutional traders.

The administrative jigsaw is taking shape. On September 17, the CFTC submitted a crypto-asset rulemaking to the White House Office of Information and Regulatory Affairs (OIRA) at the prerule stage; the contents are not yet public and a final rule is expected to take until 2027. The same day, the SEC approved a temporary Innovation Exemption allowing designated Tokenized Securities Venues to trade tokenized U.S. stocks onchain via automated market makers and liquidity pools, which Atkins called “a bridge toward longer-term rulemaking.” A week earlier, the CFTC granted no-action relief to passive software providers connecting users to regulated derivatives firms.

The division of labor between the two administrative paths is becoming clear: the SEC governs issuance (Reg CA’s fundraising exemptions and safe harbor), while the CFTC governs trading and clearing (tokenized collateral, 24/7 continuous trading, stablecoins as margin). Both rest on older statutes, are narrower than legislation, and are easier for a future administration to reverse, but that has not stopped institutional investors from voting with their feet. Circle launched its Layer-1 network Arc on September 16 with BlackRock, Visa and DTCC as validators and USDC as gas, betting on the GENIUS Act path rather than waiting for market-structure legislation.

What This Means for Practitioners