White House Signals Regulatory Push if CLARITY Act Fails
The White House is preparing to move quickly on cryptocurrency regulation through federal agencies if Congress fails to pass the CLARITY Act, according to Patrick Witt, executive director of President Donald Trump’s Council of Advisers on Digital Assets.
In an interview with Semafor ahead of the Senate’s expected procedural vote on the crypto market structure legislation, Witt said the administration would “lick our wounds very quickly” if the bill fails and move to its “next chapter” — an aggressive rulemaking agenda at the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
The comments come as lawmakers face a critical deadline for the legislation, which has become one of the crypto industry’s biggest legislative priorities in Washington.
CLARITY Act Faces a Critical Senate Test
The Senate is expected to hold a procedural vote on the CLARITY Act on September 15.
The legislation is intended to establish a comprehensive framework for U.S. digital asset markets, including clearer boundaries between the SEC and CFTC and rules governing which digital assets and market activities fall under each agency’s jurisdiction.
The bill needs bipartisan support to overcome the Senate’s procedural threshold. Recent reporting indicates that negotiations remain difficult, particularly around ethics provisions, stablecoin-related issues and safeguards concerning President Trump’s crypto interests.
Witt told Semafor that the upcoming vote could represent the last realistic opportunity for Congress to advance the legislation for some time.
“If anyone thinks that … we can’t possibly pass that bill into law unless we have some draconian, state AG-enforced ethics provision — that’s unreasonable,” Witt said, according to Semafor.
Witt: Administration Has a Regulatory Plan B
While Witt emphasized that legislation remains the preferred approach, he made clear that the administration does not intend to stop its cryptocurrency policy agenda if Congress fails to act.
“If it ultimately doesn’t pass, we’ll lick our wounds very quickly, and we’ll turn to the next chapter,” Witt told Semafor, describing that next phase as an “aggressive rulemaking agenda” at both agencies.
Witt said the SEC and CFTC already have several initiatives underway or planned that could establish additional rules for digital assets within the agencies’ existing statutory authority.
That approach would allow regulators to continue shaping the crypto market without waiting for Congress to enact comprehensive market structure legislation.
However, Witt also acknowledged that agency rules are not equivalent to legislation.
“Rules are still pretty durable,” he said, while emphasizing that “nothing is quite like legislation.”
SEC Has Already Begun Changing Its Crypto Approach
The possibility of additional SEC rulemaking comes after the agency and CFTC took a significant step toward clarifying cryptocurrency regulation earlier this year.
In March 2026, the SEC issued an interpretation addressing how federal securities laws apply to certain crypto assets and transactions.
The CFTC joined the interpretation, saying it would administer the Commodity Exchange Act consistently with the SEC’s approach. The agencies described the action as an important step toward reducing regulatory uncertainty while Congress works on broader market structure legislation.
The SEC said the interpretation was intended to provide market participants with greater clarity regarding how the agency treats different types of crypto assets under federal securities laws.
Witt specifically pointed to the SEC’s RegCrypto initiative as an example of the regulatory work already taking place.
He also said an innovation exemption is expected from the SEC, although its precise structure remains under discussion among regulators and other government agencies.
CFTC Could Also Expand Its Crypto Rulemaking
The CFTC is another important part of the administration’s regulatory strategy.
Under the proposed market structure framework, the CFTC would receive a larger role in overseeing digital commodities and portions of the cryptocurrency market.
But even without the CLARITY Act, Witt said the CFTC has “a basket of different actions” it plans to pursue within its existing authority.
The agency has already been working with the SEC on crypto regulatory guidance.
In March, CFTC Chairman Michael Selig said the joint SEC-CFTC interpretation was designed to provide greater clarity to U.S. crypto builders, innovators and entrepreneurs.
Why the CLARITY Act Matters
The Digital Asset Market Clarity Act, commonly known as the CLARITY Act, is designed to establish a more clearly defined regulatory structure for digital assets in the United States.
One of its central objectives is to clarify the respective responsibilities of the SEC and CFTC.
The crypto industry has argued that uncertainty over which regulator has jurisdiction has discouraged investment and innovation in the United States.
Supporters of the bill believe a statutory framework could provide companies with greater certainty about:
- Which regulator oversees a particular digital asset
- Registration and compliance requirements
- Rules for crypto exchanges and intermediaries
- Treatment of digital commodities
- SEC and CFTC jurisdiction
- Consumer and market protections
- Requirements for digital asset market participants
The White House has strongly supported the legislation, with Trump publicly urging Congress to pass a version of the bill.
Agency Rules Would Be Faster but More Limited
Witt’s comments highlight an important difference between congressional legislation and agency rulemaking.
A law passed by Congress can establish statutory authority and create a durable framework that subsequent administrations may find more difficult to reverse.
Agency rules, interpretations and exemptions can potentially be developed more quickly, but they must remain within the agencies’ existing legal authority and can face legal challenges.
That distinction is why Witt continues to describe the CLARITY Act as the preferred outcome.
At the same time, the administration appears prepared to use every available regulatory tool if lawmakers cannot reach an agreement.
Democrats Could Lose Influence Over Future Crypto Rules
Witt also used the potential agency rulemaking agenda as an argument for Democratic senators to support the legislation.
He told Semafor that the White House had made clear it would work toward advancing Democratic commissioners at both the SEC and CFTC as part of getting the CLARITY Act completed.
Witt argued that Democratic support for the bill could provide Democrats with representation at the agencies while they develop digital asset rules.
“If you want representation” as the agencies write digital asset rules, Witt said, supporting CLARITY would give lawmakers an opportunity to influence that process.
The argument comes as the legislation faces opposition from some Democrats over ethics provisions and concerns about Trump’s involvement in the cryptocurrency industry.
Ethics Dispute Remains a Major Obstacle
The biggest remaining obstacle to the CLARITY Act appears to involve restrictions on the ability of public officials, particularly Trump, to profit from cryptocurrency-related businesses.
Trump has agreed to a limited restriction on his crypto dealings, but Democrats have argued that the proposal does not go far enough.
Senators Ruben Gallego and Thom Tillis have been involved in discussions around a bipartisan approach that would impose stronger restrictions, including potential divestment requirements and enforcement mechanisms involving state attorneys general.
Witt acknowledged that these issues remain under active discussion but suggested that lawmakers could address them through amendments rather than allowing the legislation to fail entirely.
Crypto Industry Is Lobbying Intensely Ahead of the Vote
The White House’s warning comes as the crypto industry and banking groups have intensified lobbying efforts ahead of the September 15 vote.
Reuters reported that cryptocurrency advocacy organizations have been campaigning in senators’ home states during the congressional recess, while banking organizations have also mobilized against provisions they believe could affect traditional bank deposits and lending.
The crypto industry has already invested heavily in political advocacy and sees the current congressional window as particularly important because the November midterm elections could change the political balance in Washington.
If Democrats gain greater control of Congress, supporters fear that passing comprehensive crypto market structure legislation could become significantly more difficult.
What Happens If CLARITY Fails?
If the bill fails to advance, the regulatory landscape is unlikely to remain unchanged.
Based on Witt’s comments, the administration’s alternative strategy would include:
SEC rulemaking:
The agency could continue developing rules and exemptions addressing digital asset markets, including the proposed innovation exemption.
CFTC action:
The commodities regulator could pursue additional rules and other initiatives within its existing authority.
Continued SEC-CFTC coordination:
The agencies could continue working together to define how existing securities and commodities laws apply to cryptocurrencies.
Regulatory clarification:
Additional interpretations could provide market participants with more certainty without requiring Congress to pass a new law.
Witt characterized the potential program as an aggressive effort to establish rules for a market that has operated amid regulatory uncertainty for years.
Congress Still Offers a More Permanent Solution
Despite the administration’s willingness to pursue rulemaking, Witt stressed that legislation remains the preferred option.
The reason is straightforward: a comprehensive congressional law could provide a statutory foundation for crypto regulation that is more durable than individual agency actions.
The SEC and CFTC can only act within the authority granted to them by Congress.
A market structure law could therefore give regulators clearer and potentially broader authority while establishing rules that apply across the industry.
That is one reason the White House continues to push lawmakers toward a legislative solution.
Could a Failed Vote Delay Crypto Legislation for Years?
Witt warned that failure could have consequences extending beyond the immediate vote.
He said a failed procedural vote could mean that Congress does not get another opportunity for years, particularly if the November elections produce a divided government.
“It’s tough to pass things in a lame-duck period; it’s tough to pass things towards the end of the administration,” Witt said.
That timeline is one of the reasons crypto companies are pushing lawmakers to reach a compromise before the current congressional window closes.
The House also has a shortened September schedule, creating additional pressure on lawmakers if Senate negotiations lead to changes that would require House action.
What Crypto Companies Should Watch
The September 15 Senate vote will be the immediate event to watch.
However, investors and crypto companies should also monitor developments at the SEC and CFTC.
If CLARITY advances, the agencies could eventually receive new statutory responsibilities under the legislation.
If it fails, the administration’s regulatory agencies may accelerate work already underway.
Either outcome could significantly affect how cryptocurrency exchanges, token issuers, decentralized finance platforms and other digital asset businesses operate in the United States.
Conclusion
White House crypto adviser Patrick Witt has warned that the Trump administration is prepared to move quickly toward aggressive SEC and CFTC rulemaking if Congress fails to advance the CLARITY Act.
Speaking to Semafor ahead of the Senate’s expected September 15 procedural vote, Witt said the administration would “lick our wounds very quickly” and move to its “next chapter” if the legislation fails.
That next chapter could include an aggressive regulatory agenda covering digital assets, including an SEC innovation exemption and additional CFTC actions.
The administration nevertheless continues to view legislation as the preferred solution. The CLARITY Act would establish a statutory framework for digital asset market regulation and clarify the roles of the SEC and CFTC.
With the Senate vote approaching and negotiations over ethics, stablecoins and other provisions continuing, the outcome could determine whether the United States receives a comprehensive congressional crypto framework or instead enters a new phase of agency-led digital asset regulation.
For the cryptocurrency industry, either path could bring more regulatory clarity — but the source, permanence and scope of that clarity could be very different.
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