SEC and CFTC Crypto Rules 'Fall Short' of Clarity, Says Rep. French Hill

The regulators may be busy on crypto, but they can't finish the job. That was the message from Rep. French Hill, who argued this week that the flurry of crypto rulemaking from the SEC and CFTC is no substitute for the market-structure law that stalled in the Senate.

Speaking in an interview with Fox Business on Wednesday, Hill, the Arkansas Republican who chairs the House Financial Services Committee, credited the two agencies for stepping into the vacuum.

Hill noted that SEC Chairman Paul Atkins and CFTC Chairman Mike Selig "have taken steps to use their regulatory power, their exemptive relief, to give definition to digital assets and digital commodities, so we can have a functional system here in the U.S. for this innovative form of finance."

But he was blunt about the limits of that approach. "In my judgement, these regulatory policies fall short of what we have to do, which is have a legislative solution," Hill said, pointing to his own authorship of FIT21 in the previous Congress and the Clarity Act in this one.

He said he still holds out hope the bill can pass during the lame-duck session, arguing, "We need that permanent law change to make sure America is number one in digital assets and blockchain technology."

Hill's comments cut against a narrative that has taken hold since the Clarity Act's collapse. The bill would have set the rules of the road for the majority of cryptocurrency activity in the United States, and cleared up the jurisdictional lines between the CFTC and the SEC on digital assets.

But the Senate failed to advance the bill in a 49-50 vote last month, prompting the SEC and CFTC to press ahead with their own initiatives and leading many in the industry to conclude that crypto had stopped waiting on Congress and learned to lean on the regulators instead.

Those agency moves have come fast. The SEC rolled out an "innovation exemption" for tokenized stocks and proposed new rules for how investment advisers and funds can custody crypto, while the CFTC sent crypto-markets rulemakings to the White House and floated a plan to bring crypto exchanges under federal oversight. Together, the steps amount to the only form of “clarity” that regulators can offer crypto in Congress's absence.

Hill's point is that such relief is inherently fragile. Exemptions and guidance can be challenged in court or unwound by a future administration, whereas a statute is durable.

A longtime crypto advocate tapped to lead the committee precisely because of his digital-asset focus, Hill has consistently framed legislation as the industry's only path to lasting certainty.

The lame-duck window he's banking on is narrow. Whether a bill that couldn't clear the Senate weeks ago can be revived before year's end remains an open question, but Hill, for now, isn't ready to hand the job to the regulators.