TL;DR: The CFTC and SEC are advancing crypto-focused rulemaking after the CLARITY Act stalled in the Senate, while industry figures continue to blame each other for its failure. The fallout has also intensified political spending, with Fairshake preparing new ad campaigns against lawmakers.
Key Takeaways:
- The CFTC submitted new crypto market rules to OIRA on September 17.
- The SEC and CFTC are advancing crypto rules after the CLARITY Act stalled.
- Industry figures remain divided over who was responsible for CLARITY’s failure.
- Coinbase CEO Brian Armstrong faced criticism over his lobbying approach.
- Fairshake plans a $30 million advertising campaign against former Senator Sherrod Brown.
Brief History: The CLARITY Act (H.R. 3633) is a U.S. bill introduced in 2025 to establish a clearer regulatory framework for digital assets and define the roles of the SEC and CFTC. It passed key House committees in June 2025 and advanced to House consideration in July.
Timeline Box to the CLARITY Act
- May 2024: The House passed FIT21, laying the groundwork for new rules governing digital assets.
- June 10, 2025: House committees advanced the CLARITY Act in bipartisan votes, moving the bill toward a full House vote.
- July 2025: The House passed the CLARITY Act, sending the market-structure bill to the Senate.
- May 2026: The Senate Banking Committee advanced its version of the CLARITY Act after months of negotiations.
- September 10, 2026: Updated text released: Sen. Cynthia Lummis released another updated version ahead of the planned September 15 Senate vote.
- September 14, 2026: Senate Republicans released a revised version after incorporating dozens of Democratic proposals.
- September 15, 2026: The Senate failed to advance the CLARITY Act in a 49–50 vote, leaving the legislation stalled.
Table of Contents:
Crypto finger-pointing isn’t letting up following the death of U.S. market structure legislation, but the blockchain sector’s desire for vengeance appears seriously focused in one direction.
On September 17, the White House’s Office of Information and Regulatory Affairs (OIRA) reported receiving a submission from the Commodity Futures Trading Commission (CFTC). The title of said submission? Regulation Crypto Asset Transactions and Regulation Crypto Asset Markets.
CFTC chairman Michael Selig hasn’t publicly commented on the submission, and its text hasn’t been released, but OIRA claims the proposed rules’ impact isn’t considered ‘economically significant.’ However, it will affect the Dodd-Frank rules imposed on Wall Street in the wake of the 2008 economic meltdown.
Assuming this ‘prerule’ submission secures OIRA’s approval, the proposal would then return to the CFTC for a vote by the five-member commission. However, since Selig is currently the only CFTC commissioner (President Trump having yet to nominate any additional commissioners of either political stripe), and Selig wouldn’t have sent the rules had he himself not approved, that vote should be a swift turnaround.
The CFTC’s submission follows last week’s no-action position on noncustodial developers of ‘passive software’ that connects users with CFTC-licensed brokers to facilitate trades of CFTC-registered derivative products.
Last week also saw the release of the Securities and Exchange Commission’s (SEC) proposed ‘innovation exemption’ plan that would permit certain ‘Tokenized Securities Venues’ to tokenize publicly traded stocks to allow their trading on permissioned blockchains on a 24/7 basis.
In August, the SEC released its own ‘Reg Crypto’ rulemaking proposal that would allow blockchain projects to raise funds by selling tokens without first securing SEC approval. In March, both the SEC and CFTC issued joint statements indicating their plan to support each other’s crypto rulemaking proposals.
Both regulators are acting swiftly in response to last week’s failure of the Senate’s digital asset market structure legislation (the CLARITY Act) to advance past its first procedural hurdle. Having failed to garner anywhere near the 60 votes needed to clear that cloture vote, CLARITY appears all but doomed for the current Congress. However, faint hope remains for its prospects in the ‘lame duck’ session following November’s midterm elections.
Monday brought a Bloomberg op-ed by financial columnist Paul Davies calling the CFTC/SEC’s efforts a poor substitute for Congress-approved legislation, since a new president could appoint agency chiefs who rescind rules approved by their predecessors.
Davies also noted that the U.S. Supreme Court’s striking down of the ‘Chevron deference’ in 2024 will make it easier for non-crypto stakeholders (banks, traditional exchanges, investors, etc.) to mount legal challenges to agency rules. All told, Davies said the uncertainty is “good news for traditional finance, because it makes it more likely that digital upstarts stay penned into a niche world.”
Nevertheless, the CFTC just announced that its in-house Innovation Task Force will hold its first Frontier Forum in Washington, D.C. on October 28. Chairman Selig tweeted that the events will be “public roundtables on the innovative technologies that are transforming American financial markets.” The first Forum will focus on artificial intelligence and agentic finance.
Blame’s got game
Meanwhile, the ‘blame game’ that followed CLARITY’s failure shows no signs of letting up. Last Friday, September 18, Bloomberg published a collection of quotes from blockchain firms, senators, and White House representatives that amounted to a circular firing squad.
While several unresolved issues helped trip up CLARITY, the effort to include ‘ethics’ language to limit elected officials’ ability to profit off crypto ventures loomed largest. This summer’s revelation that Trump personally earned over $1 billion from his various crypto ventures in 2025 alone didn’t help public perception of his motivations for pushing CLARITY’s passage.
Justin Slaughter, a senior adviser at the tech-focused venture capital group Paradigm, said CLARITY’s failure “begins and ends with Donald Trump.” Slaughter singled out the president’s release of his $TRUMP memecoin three days before his 2025 inauguration as “the first brick in the road to this failing.”
Castle Island Ventures partner Nic Carter echoed this view, saying “Trump needlessly complicated this whole process by entwining himself and his family in crypto, which many of us saw from the start, including me.”
Not surprisingly, a White House spokesperson pointed the finger of scorn elsewhere, saying “the only blame here belongs to Democrats, who continue to put stupid political games over doing what’s best for American technology and innovation.”
Bryan Armstrong: wasn’t me
In a saucy report issued over the weekend, the Wall Street Journal pointed the finger squarely at Brian Armstrong, CEO of the Coinbase (NASDAQ: COIN) exchange, claiming that his sharp-elbowed approach to getting CLARITY passed may have rubbed senators the wrong way.
Angela Alsobrooks (D-MD), a member of the bipartisan team that worked out the stablecoin rewards compromise that banks ultimately rejected as insufficient, received a three-minute voicemail from Armstrong in January, two weeks before the Senate Banking Committee’s planned markup session of its version of CLARITY was scrapped at the last minute due to Armstrong withdrawing his support.
Armstrong’s voicemail reportedly admonished Alsobrooks for pressing for limits to stablecoin rewards that might secure the banking sector’s support for the bill.
The WSJ claimed that when negotiations with Alsobrooks and other senators became fraught, Armstrong “could speak in a tone that some people working on the bill felt was inappropriate when talking to U.S. senators.” The WSJ’s sources claimed Armstrong “could become inflexible, leaving even the bill’s staunchest allies in the Senate feeling slighted.”
An Alsobrooks spokesperson said only that the senator has had “positive and productive conversations with Armstrong and other digital asset and banking leaders.”
Armstrong’s strong-arming reportedly also annoyed Cynthia Lummis (R-WY), one of CLARITY’s chief boosters, who “began refusing to meet with a member of Armstrong’s lobbying team.” A Lummis spokesperson claimed the senator has “a great relationship with Coinbase and is grateful for their continued dedication” to passing CLARITY.
Armstrong issued a tweet ahead of the article’s release, accusing the WSJ of having “repeatedly been hostile to CLARITY in its reporting, regurgitating bank lobby talking points, while I’ve spent years pushing for crypto legislation, but that’s not stopping them from trying to reverse the blame.”
Punchbowl News offered some support for the Journal’s reporting, writing that Coinbase and the Andreessen Horowitz (a16z) venture capital group (NASDAQ: ZADIHX) applied the most pressure on legislators during negotiations. Bipartisan agreements would be reached, but subsequent meetings would see GOP aides “backtrack or substantially revise the agreed-upon approach, citing pushback from industry.”
“In private bipartisan meetings with lawmakers and staff, Democratic aides would sometimes find their phones blowing with complaints from crypto lobbyists about the positions they’d just outlined—all before the meeting ended.”
Punchbowl also reported that “there’s now bipartisan consensus that crypto’s campaign cash had a corrosive effect on the already-difficult dynamics around market structure talks.” It probably didn’t help that some Dem aides claimed: “Republicans would sometimes invoke the ‘political consequences’ of defying the crypto sector during discussions.” And on that note…
Will Brown go down again following another PAC attack?
Coinbase and a16z are among the chief backers of the Fairshake political action committee (PAC) that spent ~$130 million in 2024 to elect a ‘crypto-friendly’ Congress. Following CLARITY’s failure, Armstrong and other Coinbase execs weren’t shy about threatening to unleash their PAC wallets against senators who voted ‘no’ last week.
On Monday, the New York Times said Tuesday will see Fairshake “unspool a planned $30 million advertising campaign against former Senator Sherrod Brown of Ohio.” Brown was the target of $40 million in Fairshake’s 2024 spending that successfully dethroned the three-term incumbent in favor of pro-crypto Republican Bernie Moreno. Brown’s opponent in 2026 is Jon Husted, the Republican appointed last year to fill the vacancy left by current vice-president J.D. Vance.
Brown formerly served as chair of the Senate Banking Committee, where his crypto skepticism was palpable. Brown had adopted a less strident tone in his current campaign, saying last week that “crypto has a part, a role, in our economy” but disagreeing with the idea of any sector effectively writing its own regulations.
Following the Times report, Brown issued a donation request regarding “data center billionaires and a crypto super PAC,” putting a multi-million-dollar target on his back. Politico quoted Brown’s campaign manager, Patrick Eisenhauer, saying the Fairshake funds prove that Husted is “for sale and the billionaires and corporations pouring millions into this race know it.”
With over $120 million at its disposal, Fairshake and its offshoots will announce additional spending plans ‘soon.’ Fairshake likes to paint itself as bipartisan, but the fact that all Senate Dems voted against CLARITY will almost certainly give the PAC’s Senate contributions a decidedly partisan tilt.
As a former Biden-era official noted on X, while Brown has a target on his back, Fairshake has yet to announce any blowback for Maine’s Susan Collins, one of four GOP senators who joined the Dems in voting ‘no’ on CLARITY. “But this is a non-partisan group? Got it.”
FAQs:
What happened to the CLARITY Act?
The CLARITY Act failed to advance after falling short of the 60 votes needed in the Senate.
What is the CFTC proposing?
The CFTC submitted new proposed rules covering crypto asset transactions and markets to OIRA on September 17.
What is the SEC doing on crypto?
The SEC is advancing proposals covering tokenized securities and crypto fundraising.
Why is Brian Armstrong facing criticism?
Reports said his aggressive lobbying approach created tensions with some lawmakers during CLARITY negotiations.
What is Fairshake doing now?
Fairshake is preparing more political spending, including a reported $30 million advertising campaign targeting Sherrod Brown.
How much money does Fairshake have?
Fairshake and its affiliates have more than $120 million available for additional spending.
Watch: Breaking down solutions to blockchain regulation hurdles
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