Crypto Regulation Showdown: CLARITY Act vs. RFIA Clash Over SEC-CFTC Control

The U.S. House of Representatives' CLARITY Act, aimed at establishing regulatory clarity for digital assets, remains on track for enactment by the end of 2025 despite a government shutdown that has stalled broader legislative activity. Wisconsin Representative Bryan Steil, a key cosponsor of the bill, reaffirmed his confidence in the legislation's prospects during a recent CNBC interview, stating that the Senate's commitment to passing the bill by 2026 remains intact. "I think we still have an opportunity to get CLARITY across the line by the end of the year," Steil said, emphasizing that the House version of the bill provides a viable framework for resolving jurisdictional disputes between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) [1].

The Senate Banking Committee, which has been central to advancing the CLARITY Act, initially planned to vote on its version of the bill by the end of September 2025. However, delays persist as the committee considers an alternative draft-the Responsible Financial Innovation Act (RFIA)-which proposes a narrower scope and retains more authority for the SEC. Wyoming Senator Cynthia Lummis, a Republican champion of crypto legislation, had previously signaled urgency, but the introduction of competing proposals has muddied the path forward. Critics argue that the RFIA's focus on SEC oversight diverges from the industry's preference for a CFTC-led regulatory model, as outlined in the CLARITY Act [4].

The CLARITY Act seeks to address the fragmented regulatory landscape by classifying digital assets into three categories: digital commodities, investment contract assets, and permitted payment stablecoins. This framework assigns exclusive jurisdiction to the CFTC for digital commodities and to the SEC for investment contracts, while permitting payment stablecoins would fall under banking regulators. The bill also includes provisions for intermediaries, requiring exchanges and brokers to register with the CFTC and adhere to safeguards such as customer fund segregation and risk disclosures. These measures aim to balance innovation with investor protections, though critics have raised concerns about potential regulatory arbitrage and the CFTC's capacity to manage expanded responsibilities [3].

The ongoing government shutdown, now in its eighth day, has further complicated the legislative timeline. While Congress remains in session, federal agencies like the SEC are operating with limited staff, delaying reviews of crypto-related applications, including exchange-traded fund (ETF) proposals. Steil noted that the House's return to session is contingent on the Senate passing a funding bill, which remains uncertain. The shutdown has also paused the Senate Banking Committee's progress on finalizing its version of the CLARITY Act, though Steil remains optimistic that negotiations will resume once operations normalize [1].

Despite these challenges, the CLARITY Act's passage is seen as critical to positioning the U.S. as a global leader in crypto innovation. The House passed the bill in July 2025 as part of its broader crypto policy agenda, but Senate approval remains the final hurdle. If enacted, the Act would establish a statutory division of regulatory authority, providing clarity for market participants and reducing reliance on enforcement-driven interpretations. However, the introduction of the RFIA and potential amendments from the Senate Agriculture Committee could extend the legislative process into early 2026, complicating the timeline for implementation [4].