CLARITY Act Lives! House Financial Chair: Congress, Not SEC/CFTC, Offers Reliable Regulation

Hill Pushes for CLARITY Act Amidst Regulatory Uncertainty

U.S. House Financial Services Committee Chairman French Hill stated unequivocally that regulatory actions by the SEC and CFTC are insufficient to replace congressional legislation, expressing hope that the CLARITY Act can still pass during the post-election lame-duck session.

In a Fox Business interview on Wednesday, Chairman French Hill of the House Financial Services Committee asserted that while the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have begun proposing new rules for digital assets, these administrative regulatory actions are “not enough” to substitute the stability of congressional legislation. Hill believes the crypto market requires a long-term, predictable legal framework, rather than relying on the discretion of regulatory agencies.

Last month, the Senate failed to pass the Digital Asset Market Transparency Act, or CLARITY Act, which was seen as a crucial step toward a clear regulatory path for the U.S. crypto industry. Following the bill’s failure, SEC Chairman Paul Atkins and CFTC Chairman Michael Selig, under the direction of President Donald Trump, each proposed their own crypto regulatory drafts, covering spot market classification, stablecoin compliance, and derivatives oversight.

However, Hill made it clear in the interview that the responses from both agencies are “not keeping up” with a legislative solution. He argued that administrative regulations lack the force of law and are susceptible to change with shifts in administration, which is insufficient for crypto businesses and investors requiring long-term planning.

Hill remains hopeful about the CLARITY Act, suggesting that lawmakers might push for its passage during the lame-duck session following the midterm elections. According to the current schedule, the Senate will have only 22 working days between the conclusion of the November midterms and the inauguration of the new Congress in 2027. The voting outcomes during this extremely narrow window will be significantly influenced by election results, potentially altering the stances of lawmakers who know whether they will retain their seats next year.

This lame-duck legislative model has precedent. In late 2020, Congress rapidly passed the framework for the CHIPS and Science Act, which included chip subsidies and infrastructure investments, in a very short timeframe. For the crypto industry, completing CLARITY legislation before the formation of a new Congress would avert two more years of regulatory uncertainty.

Another structural issue warranting attention is the leadership vacancies at the SEC and CFTC. As of Wednesday, the two agencies collectively have seven open positions. SEC Commissioner Hester Peirce announced her resignation last week, leaving only Chairman Atkins and Commissioner Mark Uyeda at the SEC. At the CFTC, Chairman Michael Selig is the sole commissioner in office.

These sparse personnel numbers limit decision-making efficiency. SEC proposals for crypto-related regulations require a minimum of three commissioners’ votes to take effect; the current configuration of two commissioners makes it practically difficult for the commission to function. The CFTC faces similar challenges, with Selig having to advance new rules without the support of other commissioners.

For the crypto industry, the delay in passing the CLARITY Act means continued reliance on SEC and CFTC administrative regulations in the short term. While these regulations are swift, they lack long-term stability and could be invalidated by subsequent legal challenges. Exchanges, custodians, and project developers will need to continue investing compliance resources to navigate the varying standards of different regulatory bodies.

On the other hand, Hill’s public statements also signal to the market that Congress still values crypto legislation and will not cede regulatory authority entirely to administrative agencies. This is a positive long-term signal for the industry, indicating that there is still room for progress at the legislative level. Although the 22-day window of the lame-duck session is narrow, it is not impossible; Congress has passed significant legislation in even shorter periods.