Clarity Act Sponsor Says SEC, CFTC Crypto Rules Cannot Replace Legislation

Hill acknowledged that both agencies have moved to establish a regulatory framework for digital assets to try to fill the gap left by Congress’ failure to enact the Clarity Act, Decrypt reported Wednesday (Oct. 7), citing Fox Business. But he warned that their actions cannot substitute for permanent statutory authority.

“In my judgment, these regulatory policies fall short of what we have to do, which is have a legislative solution,” Hill said, per the report.

Hill’s comments underscored the limitations of the regulatory approach that has emerged since the Senate failed to advance the Clarity Act in a 49-50 vote in September. The legislation would have established a comprehensive market structure framework for digital assets, including clearer jurisdictional boundaries between the SEC and CFTC.

Hill credited SEC Chairman Paul Atkins and CFTC Chairman Mike Selig for taking steps to use their regulatory authority and exemptive powers to define digital assets and digital commodities, the report said.

The SEC introduced an “innovation exemption” designed to accommodate tokenized stocks, allowing certain blockchain-based securities activities to proceed under relief from existing regulatory requirements, according to the report. It also proposed changes to rules governing how investment advisers and investment funds can custody cryptocurrencies, addressing a longstanding obstacle to institutional participation in digital asset markets.