- Regulators are not waiting for Congress. The Securities and Exchange Commission and the Commodity Futures Trading Commission are expected to proceed with crypto and prediction-market rules despite new Democratic majorities taking office early next year, American Banker reported, with both agencies saying they will act independently under existing authorities after the CLARITY market structure bill failed in September.
- The SEC is building a registration workaround. The agency has proposed “Regulation Crypto Assets,” which includes two exemptions that would let crypto firms raise capital without traditional registration.
- The CFTC is moving on leverage. The commission is seeking public input on a federal framework for leveraged crypto trading, under a plan outlined by Chairman Mike Selig.
- Oversight is coming. Democrats may call SEC Chair Paul Atkins and Selig to testify, along with crypto and prediction-market executives, said Ian Katz of Capital Alpha: “The Democrats are far more unhappy with crypto than they are with banks.”
What Happened?
With the CLARITY Act dead after September, the SEC and CFTC are turning to rulemaking to set the terms for crypto markets. Some of the changes could be finalized before President Donald Trump’s term ends, but a future administration could reverse them. “I wouldn’t be surprised if sometime in the next two years we see some sort of version of CLARITY emerge,” said Gary DeWaal, a consultant and former CFTC attorney, adding that the industry wants to “future-proof this.” Sam Henry Lazarus of the Council on Foreign Relations said Democrats are likely limited to narrow prediction-market legislation, such as insider-trading and disclosure rules, plus oversight inquiries, particularly into Polymarket’s relationship with Donald Trump Jr.
Why It Matters?
Agency-made rules can move faster than legislation but are easier to undo, which leaves crypto firms, exchanges and their investors exposed to the next change in leadership. For banks, a central question in the market-structure debate was whether stablecoin companies may offer yield-bearing products; banking groups warn that could drain deposits, especially from smaller institutions. The political angle is sharpening too: Trump Jr. invested an undisclosed amount in Polymarket in August 2025 through 1789 Capital and sits on its advisory board, and he became a strategic adviser to Kalshi in January 2026.
What’s Next?
Watch for the comment period and final text of the SEC’s Regulation Crypto Assets, the CFTC’s next step on leveraged crypto trading, and how quickly either can be finalized before the political calendar turns. Once the new Congress is seated, expect hearing requests for Atkins and Selig; “I would absolutely expect at some point over the next two years the CEOs of exchanges to be invited to speak before the Congress,” Lazarus said.
Affected Tickers and Coins: COIN, HOOD, BTC, ETH
Source: American Banker
