- The crypto industry expects the SEC and CFTC to pursue “aggressive and swift” action on digital asset rulemaking after the CLARITY Act failed in the US Senate.
“Crypto has died today.” That’s the sentiment following the disastrous cloture vote on the Digital Asset Market CLARITY Act. Now, the ball is in the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission’s (CFTC) court to address the regulatory gap the legislature failed to close.
SEC and CFTC To Pursue “Aggressive and Swift” Action Toward Crypto Regulation
Contrary to the pessimistic narrative surrounding the CLARITY Act’s failure to secure enough votes to advance under cloture at 49-50, Bernstein analysts now expect the SEC and CFTC to take “aggressive and swift” action toward crypto rulemaking. In a note it sent to clients on Wednesday, the brokerage firm highlighted that the bill’s failure means stablecoins can maintain their rewards frameworks.
Coinbase, a leading regulated crypto exchange, is one of the companies that will heavily benefit from the fallout. It reportedly earns an estimated $1.1 billion to $1.4 billion annually on stablecoin yields through a profit-sharing agreement with USDC issuer Circle. Despite the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act’s prohibition on issuers paying interest directly to holders, it has found a loophole by framing the yields as promotional or platform-level customer incentives.
In July, SEC Chair Paul Atkins assured the crypto industry that contingency measures are in place in case the CLARITY Act fails. Together with CFTC Chair Mike Sellig, the regulator has continued working on several initiatives to provide guidance for market participants in the digital asset space, including Project Crypto.
Their efforts focus on clearer taxonomy and risk assessment for different crypto assets, and on establishing joint agency roundtables to address jurisdictional overlaps between the two financial watchdogs. However, both Atkins and Sellig emphasized that an ironclad statute is preferable, as it future-proofs the crypto industry and ensures long-term market certainty.
New Crypto Bills Brewing
Crypto may have lost the CLARITY Act battle in the Senate, but not the war. Meanwhile, the House of Representatives is gearing up to mark up two landmark crypto bills.
The House Ways and Means Committee is preparing to send crypto tax legislation to the lower chamber. It aims to treat new tokens as ordinary income upon receipt, but it also allows miners and stakers to defer that income until they sell the assets. This comes as an amendment to the Internal Revenue Service’s (IRS) current practice.
Furthermore, the GOP House Committee on Financial Services is pushing to mark up the Strategic Bitcoin Reserve bill. It mainly imposes a 20-year lockup on Bitcoin (BTC) seized by the government and requires that all future digital asset forfeitures be deposited directly into a national stockpile rather than auctioned off.
