SEC and CFTC Push Crypto Rulemaking After CLARITY Act Stalls
The CLARITY Act, the draft US legislation that would have drawn a clear boundary between SEC and CFTC jurisdiction over crypto markets, failed to clear a Senate procedural vote on 15 September 2026. Rather than wait for a second legislative attempt, the two agencies moved immediately: within a fortnight the SEC had issued a landmark exemption for tokenized-stock trading, published supplementary crypto FAQs, and the CFTC had sent draft rules to the White House and issued its own staff guidance. For accounting firms, CFOs, and auditors advising digital-asset clients, these agency actions carry direct implications for stablecoin accounting, DeFi accounting, and regulatory-capital treatment that cannot be deferred to a future Congress.
Why the CLARITY Act Failure Matters
The CLARITY Act had been the primary legislative vehicle for resolving one of the most consequential open questions in US digital-asset markets: which agency, the SEC or the CFTC, has jurisdiction over which crypto assets, and under what conditions. Its failure on 15 September 2026 effectively closes the window for comprehensive market-structure legislation before a new Congress is seated in January 2027, potentially under different party leadership following midterm elections scheduled for 3 November 2026.
The regulatory vacuum and the agency response
Within hours of the vote, leadership at both agencies signalled they would accelerate rulemaking to compensate. CFTC Chairman Michael Selig described the moment publicly as "go time," framing the remaining two years of the current presidential term as the window in which the administration's pro-digital-asset agenda must be embedded in binding agency rules rather than statute. That is a meaningful distinction for compliance teams: rules issued by agencies carry legal force but can be reversed or revised by a successor administration or through Congressional Review Act challenges, whereas legislation is structurally more durable. Firms that calibrate their compliance infrastructure to agency guidance alone should factor that political risk into their planning horizon.
The SEC Innovation Exemption: What It Does
On 17 September 2026, the SEC issued the order it had been calling its "Innovation Exemption," granting temporary, conditional relief from securities-registration requirements for a new category of market participant: Tokenized Securities Venues, or TSVs.
Scope of the exemption
TSVs are platforms that bring together buyers and sellers of tokenized versions of US-listed stocks. Under the exemption, TSVs and the liquidity providers participating in their automated market-maker pools can operate without registering as securities exchanges, broker-dealers, or dealers, provided they satisfy a set of explicit conditions. Those conditions include:
- Verifying that tokenized shares confer the same economic and voting rights as the underlying listed stock.
- Notifying the original stock issuer that its shares have been tokenized, allowing that issuer a right to object.
- Issuing tokenized stock exclusively on public ledgers that make the relevant smart contracts auditable.
- Restricting AMM pool participation to permissioned, verified buyers and sellers subject to TSV-set trading standards.
- Implementing controls against market manipulation and fraud, and ensuring OFAC compliance measures are in place.
- Publishing sufficient information about the TSV's own operations and those of its affiliates.
The exemption runs for five years. SEC Chairman Paul Atkins described it publicly as a mechanism to "resolve challenges that have prevented responsible innovation from taking root in the United States while providing investor protections and market integrity standards," and he was explicit that it is a bridge measure, not a permanent solution, while the agency pursues longer-term rulemaking.
Accounting and audit implications for TSV participants
For firms whose clients operate as TSVs, or whose treasury teams are considering participating in tokenized-stock AMM pools, the exemption creates several accounting questions that need answers before a position is taken.
First, the "same rights" requirement means that a tokenized share should, in principle, be treated as an equity instrument under ASC 321 or IAS 32 rather than as a digital asset under ASC 350-2 (the FASB's fair-value framework for crypto). That classification affects where fair-value movements land in the income statement and what disclosures are required. Second, the public-ledger auditability requirement is useful for auditors: on-chain records of AMM pool activity should be accessible for confirmations and sampling. However, firms will need to ensure their digital asset accounting software can ingest smart-contract event logs and reconcile them to trade ledgers. Third, OFAC compliance obligations embedded in the exemption conditions are not new in substance, but their formal inclusion in an SEC order raises the bar for documentation. Compliance teams should be able to demonstrate, on an ongoing basis, that counterparty screening is occurring at the pool level, not merely at onboarding.
SEC Crypto FAQs and the Broader Project Crypto Push
One week after the Innovation Exemption, on 25 September 2026, the SEC published a further set of FAQs addressing how securities laws apply to specific crypto activities. These build on a more comprehensive interpretive release issued in March 2026, in which the SEC articulated that most crypto assets are not securities and provided a taxonomy for identifying the subset that may be.
What the September FAQs address
The new FAQs focus on three areas: token buyback arrangements, marketing and promotional activities for crypto projects, and staking. For token buyback arrangements, the SEC's position has implications for how a treasury team accounts for tokens repurchased by the issuing entity. If the buyback does not create a security, it may need to be treated as an asset retirement or a reduction in circulating supply, each with different balance-sheet consequences. The staking FAQ is also relevant for firms holding proof-of-stake assets on behalf of clients: the treatment of staking rewards as income (accrual basis) versus receipt basis remains a live question under both GAAP and IFRS, and any SEC clarification on whether staking arrangements carry securities-law risk intersects directly with how those rewards are recognised.
Both the March release and the September FAQs sit within what the SEC is calling Project Crypto, a programme run through its Crypto Asset Task Force. The August 2026 "Regulation Crypto Assets" rule, which creates a framework for the offering of investment contracts involving crypto, is also part of this programme. Taken together, these outputs mean that firms can no longer treat US crypto securities law as a single undefined risk: there is now a layered body of agency guidance that requires structured mapping against each digital-asset product and activity a client touches. For a closer look at how that offering framework is structured, see our earlier analysis of the SEC's proposed crypto offering framework.
CFTC Actions: Tokenized Investments and Recordkeeping
The CFTC's September activity ran in parallel with the SEC's. On 24 September 2026, the CFTC issued staff guidance addressed to CFTC-registered firms on two points that are directly relevant to stablecoin accounting and USDC accounting for regulated intermediaries.
Customer funds in tokenized investments
The guidance clarifies that CFTC-registered firms may invest customer funds in tokenized investments, subject to the existing rules governing permissible investments for customer segregated accounts. This is significant because tokenized money-market funds and tokenized short-term Treasury products have been marketed to futures commission merchants and swap dealers as a way to earn yield on customer margin without moving cash off-exchange. The guidance does not create new permission as such; it clarifies that the existing permission extends to the tokenized form of an otherwise permissible investment. Accounting teams at FCMs should update their custody-account disclosure notes accordingly, specifying the nature of the tokenized instrument and confirming it meets the underlying investment criteria.
Public blockchain recordkeeping
Separately, the same CFTC guidance sets out standards for using public blockchain records to satisfy the CFTC's own recordkeeping requirements. This is an underappreciated operational detail: if a firm can point to immutable on-chain records as part of its books-and-records obligations, it potentially reduces the cost and complexity of maintaining parallel off-chain audit trails. However, the standard imposes its own requirements around accessibility, integrity verification, and the ability to produce records on demand to CFTC examiners. Firms should assess whether their current crypto bookkeeping software infrastructure supports the export formats and access controls the guidance anticipates.
Draft rules submitted to the White House
Also on 17 September 2026, the CFTC submitted draft crypto rules to the White House's Office of Management and Budget, the standard pre-publication review step in the US federal rulemaking process. The content of those draft rules has not been published, but the submission signals that formal proposed rules, with a public comment period, are likely within the coming months. Firms should be preparing to engage with the comment process, particularly on any rules touching spot-market crypto commodity classification, which would affect how bitcoin, ether, and similar assets are reported on regulated intermediary balance sheets.
Software wallet providers: no broker registration required
On the same day, the CFTC also issued a statement confirming it will not pursue enforcement action against passive software providers, including software wallet developers, for failing to register as introducing brokers. This removes a significant overhang for infrastructure providers and has indirect implications for accounting: if wallet software is clearly outside the introducing-broker perimeter, the costs of operating that software need not be provisioned against potential regulatory fines or remediation. It also draws a cleaner line for firms assessing whether a DeFi front-end they operate triggers any CFTC registration obligation.
UK FCA: Crypto Authorization Window Opens 30 September 2026
Outside the US, the most time-sensitive development for UK-facing firms is the FCA's publication of guidance to help firms prepare applications for its forthcoming full crypto authorization regime. The application window opened on 30 September 2026, nearly a year before the regime itself takes effect on 25 October 2027.
What requires authorization
The FCA's guidance covers the full range of activities that will require authorization, including stablecoin issuance, cryptoasset safeguarding, and operating exchange platforms. For firms currently operating under the FCA's existing crypto-asset registration regime (the anti-money-laundering register), this is a materially higher bar: full authorization involves prudential as well as conduct requirements, and the assessment process is substantially more intensive than registration. Accounting and compliance teams at UK crypto firms should treat the application window as a live deadline, not a theoretical one. A well-prepared application requires financial projections, governance documentation, and a clear articulation of the firm's operational model, all of which take time to produce to the standard the FCA will expect. The UK FCA's expanding digital-asset regulatory framework and its practical implications for firms are explored further in our article on the UK's digital asset regulatory framework expansion.
For firms advising clients on the stablecoin issuance perimeter specifically, the FCA's inclusion of stablecoin issuance as an authorized activity reinforces the need for robust stablecoin accounting policies before authorization applications are filed. Examiners will expect to see that the firm can account for reserve assets, redemption liabilities, and any yield-generating activity on reserves consistently with the prudential standards the FCA will apply.
What Firms Should Do Now
The combined effect of these developments is that the US and UK crypto regulatory landscapes have moved from a state of legislative ambiguity to a state of active, layered agency guidance in the space of a single month. That is a shift in kind, not just degree. The practical priorities for accounting firms, CFOs, and audit teams are:
Immediate actions for US-facing firms
Map each digital-asset product and activity against the SEC's March 2026 taxonomy and the September FAQs to determine whether any position previously treated as a non-security needs reclassification. Review any tokenized investment held in customer segregated accounts against the CFTC's guidance to confirm permissibility and update disclosure notes. Begin tracking CFTC rulemaking submissions through the OMB review process so the comment period does not pass unnoticed. The intersection of DeFi accounting and AML obligations in this environment is addressed in detail in our piece on DeFi accounting and AML exposure in the ESMA risk report, which provides useful framing even for US-domiciled portfolios.
Immediate actions for UK-facing firms
The FCA application window is open now. Firms that intend to continue operating after October 2027 under the full authorization regime should begin the application process without delay. The stablecoin accounting policies, reserve disclosures, and governance frameworks required for the application are also the foundations of a credible audit file. Building them now serves both purposes.
The broader lesson from September 2026 is that agency rulemaking, not legislation, is the primary driver of crypto compliance risk for at least the next two years in the United States. Firms that built their compliance calendars around CLARITY Act passage need to reset those calendars around SEC and CFTC rulemaking timelines, which are faster-moving and less predictable than a congressional schedule.
Frequently Asked Questions
Does the SEC Innovation Exemption apply to all tokenized assets, or only tokenized stocks?
The exemption applies specifically to tokenized versions of US-listed stocks traded on Tokenized Securities Venues. It does not extend to tokenized bonds, tokenized funds, or crypto assets that are not representations of an underlying listed equity. Firms should not assume it creates a broader safe harbour for DeFi activity involving other asset classes.
How should a firm account for tokenized stocks held in an AMM liquidity pool under the exemption?
Because the exemption requires that tokenized shares carry the same rights as the underlying listed stock, the instrument should generally be classified and measured as an equity investment rather than as a digital asset under FASB ASC 350-2. That means fair-value changes flow through earnings (ASC 321) or other comprehensive income depending on the election made. UK firms applying IFRS would similarly look to IFRS 9 equity-instrument treatment rather than IAS 38 intangible-asset treatment. The specific facts of each arrangement should be reviewed with qualified advisers before a classification is finalised.
What does the CFTC's blockchain recordkeeping standard require in practice?
The CFTC guidance sets out that on-chain records used to satisfy books-and-records obligations must be accessible to CFTC examiners on demand, must have verifiable integrity (meaning the firm must be able to demonstrate the records have not been altered), and must be retained for the same periods as conventional records. Firms relying on public blockchain records should ensure their digital asset accounting software can produce formatted exports that meet those standards and that they hold private-key access or equivalent read access to the relevant chain data.
Does Hester Peirce's departure from the SEC affect the Innovation Exemption or Project Crypto?
Commissioner Peirce's term ended on 2 October 2026, leaving the SEC with two commissioners. The Innovation Exemption and the FAQs were issued before her departure and carry the force of the full Commission at the time of their issuance. However, a two-commissioner SEC has limited quorum flexibility for future rulemaking votes. Whether the President makes further appointments, and on what timeline, will determine how quickly the SEC can advance longer-term digital-asset rules through a formal notice-and-comment process.
UK firms: what happens if we do not apply for FCA authorization before the October 2027 deadline?
Under the FCA's forthcoming regime, firms that have not obtained full authorization will not be permitted to carry on regulated cryptoasset activities in the UK after 25 October 2027. The application window opened 30 September 2026 to give firms sufficient time. Missing the deadline is not simply a financial penalty risk; it is an operational risk, because the firm would need to wind down or restructure UK-facing activities while an application is pending. Early engagement with the FCA application process is the only reliable way to manage that risk.
Source: Elliptic