CFTC Sends Crypto Rules to the White House After CLARITY Fails

The Commodity Futures Trading Commission sent its crypto market rulemaking to the White House on Sept. 17, two days after the Senate blocked the CLARITY Act. The file is a prerule titled “Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets,” and the agency has not published a word of it.

Democrats sank the bill over ethics language on President Donald Trump’s crypto businesses and over doubts that the CFTC could staff a new statute. The draft now sits with the Office of Information and Regulatory Affairs inside the White House budget office.

A Prerule on the White House Desk

OIRA logged the action under RIN 3038-AF80 on Thursday. The pending OIRA review listing for RIN 3038-AF80 carries no abstract, no comment docket, and no legal deadline. It is the only CFTC item waiting on that desk.

THE OIRA ENTRY FOR RIN 3038-AF80

A prerule is an early notice, an advance proposal, or another preliminary step before a Notice of Proposed Rulemaking. Executive Order 12866 gives OIRA 10 working days to finish that kind of review, against 90 calendar days for proposed and final rules. One extension of up to 30 days is allowed with the OMB director’s written approval.

Until OIRA waives review, completes it, or lets the clock run, the CFTC cannot publish. After that, the draft still needs a Commission vote, a Federal Register notice, and a public comment period before anyone has to comply. The listing itself creates no new duties.

Independent agencies used to skip this stop. A 2025 order covering independent agencies folded the CFTC and the SEC into the same OIRA queue that cabinet departments already used, except for Federal Reserve monetary policy. Congress lost the statute, and the White House gained the first look.

Tuesday’s 49-50 Vote Cleared the Agency Path

The CLARITY Act, H.R. 3633, would have split digital-commodity oversight toward the CFTC and left fundraising and investment contracts with the SEC. The House passed it 294-134 on July 17, 2025. The Senate Banking Committee voted 15-9 on May 14, 2026. Floor debate never started.

Cloture on the motion to proceed needed 60 votes. The Senate cloture roll call of 49-50 left the motion 11 votes short of 60 and one short of a simple majority. All 49 yes votes came from Republicans. Sen. Chris Coons did not vote, so 99 senators were recorded.

Four Republicans voted no, among them Sens. Susan Collins of Maine, Josh Hawley of Missouri, Jerry Moran of Kansas, and Thom Tillis of North Carolina. Tillis switched to no so he could file a motion to reconsider, a narrow procedural path that does not put the bill back on the floor. Sen. Cynthia Lummis of Wyoming, the bill’s leading Senate sponsor, said that night that the bill was dead.

The ethics fight did the damage. Democrats wanted tighter limits on officials, including Trump and his family, profiting from crypto. Hawley and Moran also objected to stablecoin yield language that banks had pressed to tighten. A last-minute Republican rewrite on ethics did not pick up a single Democratic vote.

THE WEEK THE FILE CHANGED HANDS

1. Aug. 20, 2026: CFTC Chairman Michael Selig tells the Innovation Advisory Committee that if CLARITY keeps stalling, the agency will use existing law to start a crypto market regime.
2. Sept. 15, 2026: The Senate rejects cloture on H.R. 3633 by 49-50.
3. Sept. 16, 2026: Selig says the CFTC is “locked in and ready to ship its rules for the new frontier of finance.” SEC Chairman Paul Atkins says the SEC will act “with or without legislation.”
4. Sept. 17, 2026: OIRA receives the CFTC prerule. CFTC staff issues software no-action relief. The SEC issues its Innovation Exemption for tokenized NMS stock.

Selig had already tied the timing to the bill. In those August remarks he said he had directed staff “to begin exploring rules to codify a CFTC market structure for crypto assets using the agency’s existing authorities,” and to talk with onchain protocol developers about a legal way to offer those protocols. He also said he would give the bill “breathing room for a vote,” then move if Democrats would not send a fair version to the president.

On Jan. 29, in his first speech as chairman, he had already told staff to draft rules on when leveraged, margined, or financed retail crypto commodity trades can be offered off-exchange under an “actual delivery” exception, and to explore a new designated-contract-market category for that trading. The OIRA title tracks both halves of that assignment. The public still cannot read how far the draft goes.

Wallet Software Can Route Orders Without Broker Papers

The same Thursday, the Market Participants Division put out Release 9300-26. Staff took a no-action position for passive software that is similar to Staff Letter 26-09, the March relief granted only to Phantom Technologies, and made it available to other providers who meet the terms.

Subject to specified conditions, the division will not recommend an enforcement case against a qualifying provider, or its personnel, for failing to register as an introducing broker or as an associated person of one. The cover applies only to providing and marketing software that lets users trade with registered futures commission merchants, introducing brokers, and designated contract markets.

.@CFTC Staff Issues No-Action Position to Providers of Passive Software: https://t.co/irgUh9JejX

— CFTC (@CFTC) September 17, 2026

The letter, widely identified as Staff Letter 26-25, is a staff position. It lasts until the Commission replaces it with rules or guidance. A later chair can pull it. Builders who treat it as a permanent charter will be reading more into it than the paper says.

WHAT QUALIFYING SOFTWARE MAY AND MAY NOT DO

• May connect: The tool can display market data, pass along user-directed orders, and sit as a pipeline into registered firms and designated contract markets.
• May charge: Providers can collect transaction-based fees or revenue share for that routing, under the terms staff described.
• May not hold funds: Custody of customer assets takes the activity outside the relief.
• May not trade for the user: Discretion over orders, buy or sell signals, or steering toward unregistered venues ends the cover.

Patrick Wilson, general counsel at the Solana Policy Institute, called the shift a move from a Phantom-only letter to a pattern other software shops can build around. That is the practical gain. The catch is the venue on the other end still has to be a CFTC registrant. The letter does not bless a free-standing DeFi matching engine.

Atkins Grants Tokenized Stocks a Five-Year Trial

The SEC moved on the same calendar. Release 2026-90 is a five-year Innovation Exemption for tokenized stocks, issued as an order under Exchange Act Section 36(a)(1). It expires five years after publication and asks for comment on how to change it.

Tokenized Securities Venues, or TSVs, get temporary relief from the definition of “exchange.” Covered Firms that supply liquidity in those pools get temporary relief from the definition of “dealer.” The order is limited to tokenized National Market System stock that carries the same rights as the listed share, including dividends and votes. Synthetic lookalikes are out.

Earlier this week, Congress was unsuccessful in advancing the CLARITY Act despite the tireless efforts of many. So today, the Securities and Exchange Commission is taking a significant step forward, within its statutory authority, to bring America’s capital markets into the digital age by facilitating onchain trading of certain tokenized stocks through the “Innovation Exemption.”

Paul S. Atkins, Chairman, U.S. Securities and Exchange Commission, Sept. 17, 2026 statement

A TSV must be a U.S. person, follow OFAC sanctions, permission its users, and run auditable public smart contracts on a public, permissionless ledger. It has to halt a token when the primary listing exchange halts the stock, publish notice of its operations, and stay inside symbol and volume caps. Before listing a token created by an unaffiliated third party, it must give the issuer written notice and a chance to object.

Jamie Selway, director of the Division of Trading and Markets, said the division will work with parties that want to run a TSV. Commissioner Hester Peirce called the order a chance to watch how onchain and traditional markets interact. Atkins said the trial has to be followed by durable rulemaking. The SEC already has a separate offering proposal, Regulation Crypto Assets, in the Federal Register with comments due Oct. 20.

The exemption is the piece several desks had described as delayed so it would not collide with CLARITY. Once cloture failed, it shipped. That is the second half of the same week: a statute that would have set tokenized-trading terms in law is gone, and a time-limited order is what launched instead.

Selig Is the CFTC’s Only Sitting Commissioner

Selig is the 16th chairman. The Senate confirmed him 53-43 on Dec. 18, 2025, and he was sworn in on Dec. 22. His term runs through April 13, 2029. The Commission has five seats. Four are empty. He is the only sitting member.

THE COMMISSION AS IT STANDS

• Sitting members: One, Chairman Michael Selig.
• Authorized seats: Five, with four vacant.
• Sworn in: Dec. 22, 2025, as the 16th chairman.
• Term runs through: April 13, 2029.

That vacancy list is the staffing problem Democrats put on the record during the cloture fight. Sen. Elissa Slotkin of Michigan named the CFTC directly in her no vote, saying the agencies lack the oversight and staffing to implement the bill. The agency that then sent the prerule to OIRA is a one-member Commission.

Selig’s Wednesday statement, posted after the vote, called the outcome unfortunate and said President Trump had promised a crypto market structure “one way or the other.” He said the CFTC would help “using our existing statutory authorities” and that the United States “is and will remain the crypto capital of the world.” Those authorities are the Commodity Exchange Act as it already stands, not the new digital-commodity charter CLARITY would have written.

A one-member vote can still adopt a proposal once OIRA clears it. It cannot manufacture statutory power the agency does not have. Spot crypto that is not a leveraged, margined, or financed retail commodity trade still sits in the old gray zone the bill was written to map.

What Existing Commodity Law Still Cannot Do

CLARITY would have put decentralized digital commodities under CFTC oversight by statute and drawn a line the next Congress would have had to repeal. A prerule plus a staff letter plus a five-year SEC order do not do that work. They can be rewritten, allowed to lapse, or ignored by a later chair.

Selig’s August sketch of a “crypto asset market” as a type of designated contract market would let current registrants and some unregistered crypto exchanges offer leveraged or margined crypto trading under CFTC rules. That is a large change if it is in the draft. It is still a change inside existing DCM law, not a new title of the U.S. Code. Off-exchange spot trading, token taxonomy fights that the two agencies already tried to settle in March, and the stablecoin-yield fight that peeled off Republican votes all remain outside that box.

The ethics provisions in this bill are simply too thin. President Trump, his children, and his Cabinet are making billions of dollars in the crypto space, in part from bilking everyday Americans out of their hard-earned money. I cannot in good conscience vote for any legislation that codifies that behavior from public officials.

Sen. Elissa Slotkin, D-Mich., Sept. 15, 2026 post on X

Slotkin also said national-security tools against laundering and against funding for North Korea and Iran were still short, and that she remained open to another try. The replies under that post treated the no as a gift to banks. The banking lobby had, in fact, spent months on stablecoin rewards. Both things can be true at once: ethics text blocked Democratic yes votes, and deposit competition blocked some Republican ones.

The result is the part that does not fit the campaign speeches. Democrats refused to write Trump-family crypto revenue into a statute. The CFTC then sent the substitute rulemaking to the White House office that reviews the president’s regulatory traffic. Atkins, in the Innovation Exemption statement, named the failed vote as the reason the SEC was moving under its own authority that day.

House Financial Services Chair French Hill and House Agriculture Chair Glenn Thompson said after the vote that only Congress can give lasting legal certainty. That sentence is still accurate. It is also, for this cycle, beside the point. The file that matters on Sept. 17 is the unpublished prerule at OIRA, the software letter, and the five-year stock-token order.

OIRA has the crypto file, the draft is still secret, and the only new CFTC paper the public can read is the staff letter on passive software. Whatever comes back from the White House will be Selig’s to vote, then the market’s to comment on, then some future Commission’s to keep or scrap.

Disclaimer: This article is news reporting and analysis of U.S. agency actions and Senate procedure. It is for information only and is not investment, legal, tax, or trading advice. Readers should consult a licensed attorney, compliance officer, or registered investment adviser before relying on a staff letter, an exemptive order, or an unpublished prerule to structure a product, a wallet feature, or a trade. Figures, vote counts, review clocks, and the status of letters and orders reflect the official records and statements cited here as of the dates on those records and can change when OIRA, the CFTC, the SEC, or the Senate acts again.