The Commodity Futures Trading Commission has sent two sweeping crypto rulemaking packages to the White House for review, pressing ahead with its own market framework days after the Senate failed to advance the CLARITY Act.
The agency filed “Regulation Crypto Asset Transactions” and “Regulation Crypto Asset Markets” with the Office of Information and Regulatory Affairs on Thursday, according to a filing reviewed by The Block. OIRA, a division within the Office of Management and Budget, reviews federal regulations before they are published. The move puts the CFTC’s proposed framework on the formal regulatory track without waiting for Congress.
The filing comes three days after the Senate voted 49-50 against advancing the CLARITY Act, the market structure bill the crypto industry had spent more than a year lobbying for. The defeat left the industry without the comprehensive federal framework the bill would have created, and it triggered a sharp market reaction. Spot bitcoin ETFs shed $450 million on the day of the vote, their worst session since June, and another $296 million the following day after the Federal Reserve raised rates. Ethereum funds saw $141 million leave in a single session, their deepest withdrawal in 155 trading days.
What the rules would do
Details of the draft rules have not been published, but CFTC Chair Michael Selig has described the direction in speeches over the past month. In August, Selig said he directed staff to codify a market structure for crypto assets using the agency’s existing authorities if the CLARITY Act stalled.
“This could enable current registrants as well as non-registrant crypto exchanges to be designated by the CFTC as a type of DCM known as a crypto asset market and offer crypto asset trading on a leveraged or margined basis subject to purpose-fit rules under the CFTC’s regulatory oversight,” Selig said at the time.
In practice, that would let crypto exchanges earn designation as designated contract markets, the license category that governs US derivatives venues, and offer leveraged or margined trading under direct CFTC oversight. Today, most US crypto platforms operate under state money transmitter licenses or limited federal registrations, and leveraged crypto trading has sat for years in a jurisdictional dispute between the CFTC and the Securities and Exchange Commission. The two agencies have fought over whether tokens like ether are commodities under CFTC jurisdiction or securities under SEC jurisdiction, a fight that left trading venues without a clear federal path to offering margin products.
Agencies fill the gap
The CFTC is not acting alone. A day after the CLARITY vote failed, the SEC approved a five-year exemption letting venues trade tokenized US stocks without registering as national exchanges, with tight volume caps, issuer vetoes and a ban on synthetic tokens. The SEC then convened NYSE, Nasdaq, BlackRock and Robinhood to discuss extending US equity trading to 24 hours. On Wednesday, the CFTC’s Market Participants Division issued a no-action position covering providers of passive software, letting wallet makers and DeFi interfaces route users to regulated derivatives markets without registering as brokers.
Regulators had signaled the pivot before the vote. Selig and SEC Chair Paul Atkins both said in recent weeks that their agencies would move on their own authorities if Congress stalled. The CFTC filing makes good on that warning within 48 hours of the vote.
The slower road
The route is slower than legislation. A rulemaking package must clear OIRA review, then be published as a proposed rule with a public comment period, then survive a final rule and likely court challenges from industry participants who disagree with its scope. That sequence typically takes a year or more. The CLARITY Act, had it passed, would have settled jurisdiction questions in statute and done so immediately. Rulemaking can only work within the edges of existing law, and the question of which tokens are commodities versus securities remains unresolved by Congress.
There is also a political question. An agency that writes rules under existing authority invites litigation from whoever loses. Industry groups spent heavily on the CLARITY campaign precisely because a statute is harder to undo in court than a rule. Some participants may welcome CFTC oversight as a step toward legitimacy; others may challenge the agency’s claim that it can designate crypto exchanges as contract markets without new statutory language.
Market context
The regulatory activity landed during a volatile week for crypto prices. Bitcoin fell below $75,000 after the vote, then recovered above $77,000 by Friday morning as the Bank of Japan’s widely expected rate hike to 1.25% and returning ETF inflows eased pressure. Spot bitcoin ETFs took in roughly $159 million on Thursday, ending two straight days of outflows, according to Farside data. Ether and XRP funds still posted withdrawals, a third consecutive session of outflows for ether products.
CoinShares’ market update on Thursday described the past week as one where “the outlook for crypto has become more challenging,” citing the CLARITY setback and a hawkish Fed as headwinds that push a sustained recovery further out without changing the longer-term thesis. Strategy, the largest corporate bitcoin holder, paused purchases for a second straight week.
For exchanges, the proposed CFTC framework is the closest thing yet to a federal license path for leveraged crypto trading, and several offshore venues have already explored US re-entry on that assumption. For the industry’s Washington lobby, the filing is a reminder that the legislative push that defined the past two years has produced agency rulemaking instead of a statute, and that the rules written this way can be rewritten by the next administration.