New York: US cryptocurrency regulation is increasingly set to be shaped by federal agencies rather than Congress, as momentum behind a major digital asset bill slows and uncertainty grows over whether lawmakers can reach an agreement before the next Congress takes office.The industry-backed Clarity Act, which aims to define whether crypto tokens should be regulated as securities or commodities and clarify oversight responsibilities, has stalled in the Senate, reducing expectations for near-term legislative action.The impasse places greater responsibility on the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), both of which have adopted more crypto-friendly approaches under President Donald Trump's administration.The SEC is working on a proposal that could exempt certain token offerings from securities requirements, while the CFTC is expected to discuss additional cryptocurrency regulations during an industry event this week."Agencies seemingly are ready to act, given that Congress has been unwilling or unable to do so," said Miller Whitehouse-Levine, chief executive of the Solana Policy Institute.Calls for permanent legislationDespite the expected regulatory activity, industry executives and analysts argue that only legislation passed by Congress can provide long-term certainty for the sector.Without a statutory framework, regulations introduced by federal agencies could face court challenges or be reversed by future administrations.The concern stems partly from the sharp policy shifts seen between the administrations of former President Joe Biden and President Trump.Under Biden, former SEC Chair Gary Gensler pursued enforcement actions against dozens of cryptocurrency firms, arguing that many digital assets qualified as securities and should be subject to SEC oversight. Trump's regulators have since rolled back many of those policies.Josh Riezman, chief legal and strategy officer at crypto trading firm GSR, said agency-led reforms may help the industry in the short term, but remain vulnerable to political change.Democrats likely to push for stronger safeguardsWhile many Democrats support establishing a regulatory framework for digital assets, they generally favour stricter protections related to money laundering, fraud and conflicts of interest.Potential Democratic gains in the November midterm elections could give lawmakers greater oversight of SEC and CFTC rulemaking efforts, potentially complicating implementation of new crypto regulations.Legal and industry challengesSome Wall Street firms have already raised objections to aspects of the emerging regulatory framework.CME Group sued the CFTC in June over its approval of perpetual cryptocurrency futures contracts, while industry groups have urged the SEC to place tighter limits on plans that could enable blockchain-based stock trading.Analysts say litigation could delay implementation of new rules and create the possibility that future administrations might rewrite or abandon them.Even so, many cryptocurrency executives view regulatory action by federal agencies as preferable to continued uncertainty."The agencies moving forward just shows this recognition of, we can't just stand by and not do anything," said Summer Mersinger, chief executive of the Blockchain Association and a former Republican CFTC commissioner."But we need something permanent."
