REALITY CHECK | U.S. Retail Crypto Regulation Lacks Investor Protections After CLARITY Act Failure

The failure of the U.S. Senate to advance the CLARITY Act has left retail cryptocurrency markets without the comprehensive federal framework lawmakers had sought to establish putting greater pressure on the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) to fill the gap through existing authorities.

REGULATION | The CLARITY Act Fails to Advance

The CFTC proposed a framework for exchanges offering margined, leveraged, or financed crypto transactions to retail customers. The proposal would create a new category of federally regulated venues called ‘crypto asset markets,’ subjecting them to requirements including anti-manipulation controls and proof-of-reserves obligations. Registered futures commission merchants would also be required to intermediate customer trades.

REGULATION | CFTC Sends Crypto Market Rules to White House After CLARITY Act Stalls

But the proposal does not give the CFTC broad statutory authority over the spot crypto market. That authority was a central element of the failed CLARITY Act, leaving much of the retail spot market outside a dedicated federal regulatory regime.

The CFTC said its proposed rules rely on existing authority over certain retail commodity transactions while seeking public comment on how those rules should apply to crypto assets. The agency said the framework would provide a uniform national regulatory pathway rather than relying primarily on state-level licensing.