SEC Chair Paul Atkins told reporters on Wednesday that the Securities and Exchange Commission is prepared to move forward with its own regulatory framework for cryptocurrencies if Congress fails to pass the CLARITY Act, a bill designed to establish clear federal oversight of digital assets. The statement, made during a press conference at the SEC’s Washington, D.C. headquarters, marks one of the most direct warnings from the agency that it will not wait indefinitely for legislative action.
Atkins Draws a Line on Legislative Timelines
Atkins, who took the helm of the SEC in January 2025, has made regulatory clarity for digital assets a centerpiece of his tenure. “We cannot afford to let uncertainty persist indefinitely,” Atkins said. “If the legislative path closes, we have both the authority and the responsibility to act under existing securities laws.”
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The CLARITY Act, introduced in the House of Representatives in early 2025, aims to resolve the long-standing jurisdictional dispute between the SEC and the Commodity Futures Trading Commission (CFTC) over which agency oversees digital tokens. The bill would classify most cryptocurrencies as commodities under CFTC authority, with certain tokens deemed securities subject to SEC rules. It has stalled in committee amid disagreements over investor protections and market structure provisions.
What SEC-Only Rulemaking Could Look Like
If the SEC proceeds without the CLARITY Act, it would likely use its existing authority under the Securities Act of 1933 and the Exchange Act of 1934 to propose new rules specifically addressing digital asset offerings, trading platforms, and custody requirements. Industry observers expect the agency to focus on three areas:
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- Exchange registration: Requiring platforms that trade digital assets to register as national securities exchanges or alternative trading systems, potentially bringing decentralized finance (DeFi) protocols under formal oversight.
- Token classification: Establishing clearer criteria for determining when a digital asset is a security, moving beyond the Howey Test guidance issued in prior years.
- Custody rules: Updating the SEC’s custody rule for investment advisers to explicitly cover digital assets, addressing a gap that has limited institutional participation.
Legal experts caution that SEC-only rulemaking would be vulnerable to legal challenges. “Agency rulemaking without clear congressional authorization invites litigation,” said Sarah Chen, a securities law professor at Georgetown University. “The crypto industry has shown it is willing to fight regulatory actions in court, and a rulemaking would be no different.”
Market and Industry Reaction
The announcement drew mixed reactions from the cryptocurrency industry. The Blockchain Association, a Washington-based trade group, expressed cautious support for any move toward clarity but warned against unilateral action. “We prefer a legislative solution that reflects broad consensus,” said association CEO Kristin Smith. “But if the SEC proceeds with rulemaking, it must engage in a transparent and inclusive process.”
Bitcoin and ether prices showed little immediate movement following Atkins’ remarks, suggesting that markets had already priced in the possibility of SEC action. The broader crypto market has been range-bound in recent weeks as traders await clearer signals from both Congress and regulators.
Atkins’ statement also puts pressure on lawmakers to advance the CLARITY Act. Senate Banking Committee Chair Tim Scott (R-SC) said in a statement that he remains committed to passing comprehensive digital asset legislation but acknowledged that “the clock is ticking.”
The SEC is expected to release a formal notice of proposed rulemaking within the next 60 days if the CLARITY Act does not advance, according to agency officials who spoke on condition of anonymity because the timeline is not yet public. That would set the stage for a public comment period and a final rule that could take effect in early 2027.
Frequently Asked Questions
What is the CLARITY Act?
The CLARITY Act is a proposed U.S. law that would create a federal regulatory framework for digital assets, defining which cryptocurrencies are securities versus commodities and assigning oversight to the SEC or CFTC accordingly.
Why is the SEC threatening to act alone?
Chair Atkins argues that prolonged regulatory uncertainty harms innovation and investor protection. If Congress cannot pass the CLARITY Act, the SEC believes it must use its existing authority to create rules through administrative rulemaking.
What would SEC-only action mean for crypto companies?
SEC-only rulemaking could result in a more fragmented regulatory sector, potentially differing from the comprehensive framework envisioned in the CLARITY Act. It may lead to stricter enforcement and new compliance requirements for exchanges and token issuers.
