With the Clarity Act stalled, the CFTC's crypto rule at the White House is only a pre-proposal

A week after the Senate failed to advance the Clarity Act, the crypto market structure bill, the administration is openly shifting the job to financial regulators. "I don't think it's dead, but I do think that there is a sense that the focus is shifted to the administration," Treasury Assistant Secretary Luke Pettit said on Tuesday at a CoinDesk policy event in Washington. White House crypto adviser Patrick Witt said "there's no time to waste now." Both said any chance of the bill passing after the November elections depends on how those elections go.

CNBC reported that state and federal regulators are rushing to fill the gap, pointing to two moves on September 17: an SEC exemption creating a temporary path for trading tokenized stocks, and a CFTC crypto rulemaking sent to the White House for review.

What the review list actually shows

We checked the White House Office of Information and Regulatory Affairs list of rules under review. The CFTC item is titled "Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets" (RIN 3038-AF80). It was received on September 17 and is pending review.

The detail CNBC's description leaves out is the stage. OIRA lists it as a "prerule," not a proposed rule. That is the category for advance notices and requests for comment that come before a formal proposal. So even once OIRA clears it, the CFTC would still need to publish an actual proposal, take comments, and then adopt a final rule. The document's contents have not been made public, as CNBC also noted, so its scope is unknown.

The SEC side is further along on paper. An SEC spokesperson told CNBC the agency will consider a proposal to modernize custody rules for adviser and fund assets, "including to address crypto assets." The same OIRA list shows what appears to be that item: an SEC entry called "Amendments to the Custody Rules" (RIN 3235-AN46) at the proposed-rule stage, received August 25 and still pending four weeks later.

Who it hits

For crypto traders, the practical point is timing. Neither item is a finished rule, and agency rules take a proposal, a comment period and a final vote, while a law passed by Congress would have been harder for a future administration to undo. For exchanges and brokers such as Coinbase, whose CEO pushed Congress to pass the bill, agency rules through existing authority are the fallback. Coinbase CEO Brian Armstrong told CNBC after the September 15 vote that "At this point, I don't think we can wait on Congress and the Senate." For banks and asset managers deciding whether to hold crypto for clients, the SEC custody proposal is the piece to watch, because custody rules decide who is allowed to hold the assets.

The bill is not formally dead. CNBC reported that Sen. Thom Tillis changed his vote to no, which lets him move to reconsider it. A bipartisan group of state attorneys general, meanwhile, wrote to the Senate Banking Committee on September 14 opposing the bill because it would override state securities powers.

Markets were quiet on the news. Bitcoin traded at about $86,260 late Tuesday on Coinbase, down 0.8% from its 24-hour open, and Coinbase shares closed flat at $201.07, according to Nasdaq. Earlier coverage: the stock perpetual futures filings that followed the Senate vote. See the crypto price board.

Sources: OIRA executive order review list (reginfo.gov); CNBC; CoinDesk; SEC; Coinbase Exchange; Nasdaq. This is market information, not investment advice.