The CFTC Will Write Crypto Rules Because Congress Would Not

On Thursday, September 17, 2026, CFTC Chairman Mike Selig confirmed what the derivatives industry had been bracing for since the Senate's digital asset market structure bill stalled: the Commodity Futures Trading Commission intends to write crypto rules on its own authority, in coordination with the White House, rather than wait for the Digital Asset Market Clarity Act to clear the upper chamber. The CLARITY Act passed the House on July 17, 2025, by a margin of 294 to 134, with 78 Democrats voting yes. It has never reached 60 votes in the Senate. Selig's answer to that deadlock is an agency of roughly 700 people writing the operating manual for an asset class that trades around the clock in every jurisdiction on earth.

That is not a small thing. It is the difference between rules that carry the force of a statute passed by elected representatives and rules that carry the force of a commission vote, subject to reversal by the next administration, the next chairman, or the next federal court.

The Vote That Did Not Happen

The CLARITY Act was supposed to settle the oldest fight in American crypto regulation: whether a given token is a security under the SEC or a commodity under the CFTC. The House version handed the CFTC primary spot market authority over digital commodities, gave the SEC a narrowed lane over investment contracts, and built a path for tokens to transition from one bucket to the other as their networks decentralized.

The Senate never delivered. Senate Banking and Senate Agriculture share jurisdiction, and sharing jurisdiction in the Senate means two chairmen, two staff drafts, and two sets of members who want their names on the final text. Tim Scott's Banking Committee and the Agriculture Committee produced competing frameworks. Cynthia Lummis and Kirsten Gillibrand pushed a bipartisan compromise. Elizabeth Warren and a bloc of Democrats treated the entire exercise as a bailout for an industry that had spent heavily on the 2024 and 2026 election cycles. Add the filibuster and the arithmetic stops working. Sixty votes is a high bar for a bill that a meaningful share of one party regards as a favor to donors.

So the bill sits. The GENIUS Act, signed on July 18, 2025, gave stablecoins a federal charter regime and proved that Congress can legislate on crypto when the ask is narrow. Market structure is not narrow. It touches custody, exchange registration, broker-dealer rules, bankruptcy treatment, and the definition of a security, which is to say it touches the Howey test and 80 years of case law built on top of it.

An Agency Built for Wheat Futures

The CFTC was created in 1974 to oversee commodity futures. Its statutory home is the Commodity Exchange Act, a 1936 law written for grain elevators. The agency has grown into a supervisor of swaps markets with notional value in the hundreds of trillions of dollars, but it has done so on a budget that hovers around $365 million a year against the SEC's roughly $2.4 billion. The SEC employs something close to 5,000 people. The CFTC employs a fraction of that.

Then there is the composition problem. The Commission is designed to seat five commissioners, no more than three from one party. Through 2025 it drained to a single sitting commissioner, Caroline Pham, who ran the agency as acting chair. A quorum of one is a constitutional curiosity that nobody wanted to litigate. Selig inherited an institution that had spent a year making decisions without the deliberative structure Congress built into it.

Now that institution proposes to define what a digital commodity is, who may list one, what disclosures a token issuer owes, how customer assets must be segregated, and what a compliant spot exchange looks like. Those are the questions the CLARITY Act was drafted to answer. An agency writing them by rule is an agency answering a question Congress asked and declined to resolve.

The industry case for proceeding anyway is straightforward. Four years of enforcement-first regulation under the previous SEC produced a body of law made in settlement agreements and district court opinions, not rulebooks. Firms could not tell in advance whether listing a token was legal. Capital moved to Dubai, Singapore, and Zug. A registered path with published requirements, even an imperfect one, beats guessing. Selig's position is that the market cannot wait on a chamber that has not scheduled the vote.

Rulemaking After Loper Bright

Here is the problem the industry's advocates keep underweighting. The legal ground for aggressive agency rulemaking has moved sharply in the last four years, and it has moved against agencies.

In West Virginia v. EPA in 2022, the Supreme Court formalized the major questions doctrine: when an agency claims power over a question of vast economic and political significance, it needs clear congressional authorization, not a plausible reading of an old statute. On June 28, 2024, Loper Bright Enterprises v. Raimondo overturned Chevron deference outright. Federal courts no longer defer to an agency's reasonable interpretation of an ambiguous statute. Judges decide what the statute means.

Apply that to the CFTC. The Commodity Exchange Act gives the agency anti-fraud and anti-manipulation authority over spot commodity markets. It does not give the agency a registration regime for spot commodity exchanges. That gap is exactly why the CLARITY Act exists. A rulemaking that fills the gap by interpretation is a rulemaking that invites a challenge from the first firm that dislikes the outcome, and that firm will cite Loper Bright in its opening brief.

The politics compound the legal risk. Rules made under the Administrative Procedure Act go out for notice and comment, typically 60 to 90 days, then face litigation, then face the Congressional Review Act, then face the next administration. A Democratic president in 2029 could direct a new chairman to repeal the entire framework without a single vote in Congress. Firms are being asked to build compliance departments on top of a legal foundation with a four-year warranty.

The White House involvement, which Selig named directly, cuts both ways. Presidential backing means resources, interagency coordination with Paul Atkins's SEC, and political cover. It also means the rules will be read as policy of one administration rather than law of the United States. That is precisely the fragility the industry spent six years lobbying to escape.

The Industry Is Not United

There is a real split here, and it does not map neatly onto bullish and bearish.

The exchanges and the large institutional players want rules now. Coinbase, Kraken, and the derivatives venues have compliance budgets, legal teams, and a strategic interest in a regime whose fixed costs they can absorb and smaller competitors cannot. Regulatory clarity at the CFTC also means CFTC-registered venues capture volume from offshore platforms. For them a shaky rule beats no rule, and a rule with high compliance overhead is a moat.

The other camp, smaller and louder, argues that agency rulemaking without statutory authority sets a precedent that will be used against the industry the moment the political wind shifts. If the CFTC can invent a registration regime for digital commodities by interpretation, a future commission can invent prohibitions the same way. Every power an agency claims under a friendly chairman remains available to a hostile one. This camp would rather keep pressing the Senate, accept two or three more years of uncertainty, and get a statute that cannot be undone by a change of personnel.

The developers and self-custody advocates form a third position, and it is the one that gets the least attention in Washington. Their concern is not which agency wins the turf war. It is whether writing software becomes a licensable activity, whether running a node or publishing code pulls someone into a money transmitter regime, and whether the DeFi provisions in any framework criminalize non-custodial protocols. The CLARITY Act's House text carved out some of this. A rulemaking has no such text to constrain it, only whatever the Commission chooses to draft.

Compare Brussels. The EU's Markets in Crypto-Assets regulation became fully applicable on December 30, 2024. It is heavy-handed, it imposes real costs on stablecoin issuers, and several firms delisted euro-adjacent products rather than comply. But it is a regulation passed by a legislature, uniform across 27 member states, and stable. European firms know what the rules are for the next decade. American firms will know what the rules are until the next inauguration. That is an underrated competitive disadvantage, and no amount of enthusiasm from a single chairman fixes it.

Bitcoin Does Not Need Permission

Now the part that Washington habitually skips. Almost none of this applies to Bitcoin itself.

Bitcoin has been a commodity in the CFTC's view since 2015. It has no issuer, no promoter, no management team whose efforts drive returns, and therefore no plausible claim to be a security under Howey. The protocol issues 3.125 BTC per block after the April 2024 halving, will cut to 1.5625 in 2028, and stops at 21 million coins. No commission vote changes that schedule. No executive order changes that schedule. The supply curve was set in 2009 and has been enforced since by nothing more than people running software they chose to run.

That is the actual point, and it deserves to be stated without hedging. The entire spectacle of a federal agency deciding whether it may write rules for a monetary asset, absent authority from the legislature, is a demonstration of why an asset outside that process has value. The dollar's supply is a policy variable set by a committee that meets eight times a year. The Federal Reserve expanded its balance sheet from roughly $4 trillion to nearly $9 trillion between early 2020 and 2022, and American consumers paid for it through a cumulative price level increase they never voted on. Bitcoin's supply is a constant. One of those is money that a chairman can change his mind about. The other is not.

This does not make regulation irrelevant. Regulation determines which exchanges operate legally, which banks will custody coins, which pension funds can allocate, and whether a developer can publish code without a lawyer. Those things matter enormously for adoption. But they do not touch the asset. A rulemaking regime that collapses in the Fifth Circuit in 2028 will leave Bitcoin blocks producing on roughly ten-minute intervals, as they have for over 17 years. Sound money does not require a statute. It requires that nobody be able to print more of it, and that condition was satisfied before the CFTC had an opinion.

The correct posture for anyone holding Bitcoin is therefore indifference to the turf war and vigilance about the specifics. Watch the self-custody language. Watch the definition of broker. Watch whether the rulemaking treats holding your own keys as a regulated activity. Those are the provisions that constrain liberty. The rest is agencies arguing over who gets the desk.

What to Watch

A proposed rule before year-end. Selig has signaled intent, not text. Expect an advance notice of proposed rulemaking or a formal proposal from the CFTC within the next two to four months, with a comment period of 60 days minimum. If nothing appears by January 2027, read the September statement as leverage aimed at the Senate rather than a real program.

The November 3, 2026 midterms. If Republicans lose the Senate, the CLARITY Act is dead for at least two years and agency rulemaking becomes the only path. If they hold and gain, a narrowed market structure bill returns in the first quarter of 2027 and the rulemaking becomes a bargaining chip. Either way the election, not the chairman, decides the shape of this.

Commission quorum. Watch nominations. A five-member commission, or even three, changes the legal durability of anything adopted. Rules passed by a thin or contested commission draw procedural challenges before anyone reaches the merits.

The first lawsuit. Whoever loses on the definition of a digital commodity will sue, and they will lead with Loper Bright and the major questions doctrine. Track which circuit. The Fifth Circuit has been the least forgiving venue for agency overreach, and litigants know how to get there.

SEC and CFTC harmonization. Paul Atkins and Selig have to agree on where the boundary sits. If the two agencies publish inconsistent definitions of the same token, the resulting litigation will be worse than the enforcement era it replaced.

Offshore volume share. The honest test of whether any of this works is whether spot volume moves back onshore. If US-registered venues are not gaining share by mid-2027, the rules failed regardless of what the Federal Register says.

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Source: Bitcoin Magazine