Shortly after news broke that the CLARITY bill was rejected in the U.S. Senate, industry attention has quickly shifted to the 'Plan B' administrative rulemaking being prepared by regulatory agencies. Instead of waiting for Congress to pass legislation, the idea is to use existing authorities to establish rules directly. The U.S. Securities and Exchange Commission (SEC) plans to push for a capital-raising safe harbor based on thresholds of $5 million and $75 million, building on guidelines it proposed this past August. Meanwhile, Commodity Futures Trading Commission (CFTC) Chair Michael Selig has also stepped up, stating he will actively use existing anti-monopoly and anti-fraud enforcement powers under the Commodity Exchange Act (CEA) to directly regulate the digital asset spot market.

This effectively marks a pivot from fundamental solutions through legislation to an administrative detour through regulation. While this may relieve some immediate market uncertainty, it remains a fragile approach in the long run. As analysts at Bernstein and others have pointed out, administrative rules are less durable than legislation and can be easily overturned by legal challenges or a change in policy under the next administration. We will need to keep a close watch on how these agencies release their specific guidelines, as sensitive issues like token classification and DeFi developer protection may still face tedious courtroom battles.

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