Fall Legislative Agenda Challenges SEC Grip on Crypto Oversight

Labor Day doesn’t just mark the end of summer, but also the return of U.S. lawmakers to Congress after the summer recess.

And for the digital asset and cryptocurrency sector, the stakes have rarely been higher. After all, for over a decade, U.S. crypto oversight has been marked less by comprehensive regulation and more by jurisdictional conflict.

This fractured landscape, combined with the current administration’s favorable view of the crypto sector, has created a growing urgency for congressional action around policy, particularly given the successful GENIUS Act momentum.

The CLARITY Act is the clearest attempt yet to meet that demand for a coherent market structure for digital assets in the United States. During this July’s “Crypto Week,” the House of Representatives passed the CLARITY Act with bipartisan support. As it is currently written, the CLARITY Act clarifies oversight responsibility of the Commodity Futures Trading Commission (CFTC), which has positioned itself as the more innovation-friendly regulator, viewing many decentralized tokens as commodities rather than securities.

But at the same time, the Senate Banking Committee has also introduced its own competing framework, the Responsible Financial Innovation Act (RFIA), with sharper emphasis on Securities and Exchange Commission (SEC) oversight. The outcome of these debates could shape the trajectory of crypto innovation and financial services for a generation.

Read more: Washington’s Fall Agenda Puts Crypto, Banking Rules in the Crosshairs

Unpacking the CLARITY Act’s Core Framework

The most consequential feature of the CLARITY Act may be its implicit rebuke of the SEC’s expansive claims to authority. At its heart, the CLARITY Act divides digital assets into three categories: digital commodities, investment contract assets and permitted payment stablecoins. Each classification carries distinct regulatory implications, with oversight split between the SEC, the CFTC and federal banking regulators.

By explicitly defining when digital assets cease to be securities, the Act narrows the SEC’s jurisdiction and hands significant new powers to the CFTC. Exchanges and broker-dealers dealing in digital commodities would register with the CFTC, not the SEC, marking a profound structural shift in U.S. market oversight.

Per the CLARITY Act, digital commodities are defined as tokens whose value is tied directly to the functioning of a blockchain system. They are not securities or derivatives and fall under the CFTC’s remit. Investment contract assets occupy the middle ground: tokens sold to raise capital in a securities-like context but which may later “graduate” into commodities once they circulate freely in secondary markets. Permitted payment stablecoins, meanwhile, are currency-denominated tokens subject to banking supervision.

The mechanism is designed to bring coherence where ambiguity has reigned. For issuers, the Act clarifies when tokens are securities, how long that status lasts, and under what conditions tokens become commodities. For intermediaries, it establishes new registration regimes with the CFTC and revises SEC rules to accommodate digital assets on existing trading platforms. And for investors, it promises more transparent disclosures and safeguards — at least in theory.

Read more: Institutional-Grade Custody Remains Missing Link in Crypto’s Mainstream Breakthrough

Innovation, Investor Protection and the Custody Question

For the crypto industry, the CLARITY Act is a welcome development. Many firms view the CFTC as a more principles-based, less adversarial regulator than the SEC. But the CFTC has limited experience supervising retail-facing spot markets and lacks the funding and staffing of its securities counterpart. Asking it to stand up a comprehensive oversight regime for crypto may stretch its institutional capacity.

By allowing investment contract assets to shed their securities status once they hit secondary markets, critics argue, the Act creates opportunities for regulatory arbitrage. Issuers may structure offerings to transition rapidly into CFTC-regulated commodities, leaving retail investors exposed with fewer protections.

The political dynamics are fluid. Senate Banking Chair Tim Scott has promised a completed market structure package by the end of September. That package may involve reconciling the RFIA with contributions from the Senate Agriculture Committee, which oversees the CFTC’s jurisdiction. The ultimate bill could blend elements from both frameworks, though the degree of SEC versus CFTC authority remains the central fault line.

The broader message is that digital assets are no longer an experimental niche. They are integral to the future of payments, capital markets, and even decentralized infrastructure. Congress’s market structure bill, in whatever final form it takes, will set the tone for how financial services integrate crypto into their business models.