In the wake of the failed cloture vote on the CLARITY Act in the Senate — the procedural vote a bill must clear before advancing to a final floor vote — the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) moved immediately to issue their own rules for crypto markets. With Congress leaving the framework unfinished, the agencies are producing rules that carry weight legislation has yet to provide, which makes the legal durability of what they create more than an academic question for the firms now building on top of them.

Two days after the vote, the SEC unveiled a five-year exemption that permits the issuing and trading of stock tokens. Since then, OKX has teamed up with ICE to launch trading in 63 NYSE-listed stocks and Securitize has launched 12 Securitize Stocks, including Apple, Nvidia and Microsoft. Those launches put live trading activity on top of a rule that, as explained below, could in principle be rescinded — a tension that runs through the entire discussion.

The SEC has also issued guidance clarifying that a crypto token does not become a security simply because a project is buying back its own tokens, and it has stated that liquid staking tokens are not securities. The agency has additionally proposed new rules for the custody of crypto assets. Not all of these actions carry the same legal weight — some are formal rulemaking, while others, like the SEC's FAQ on token buybacks, function closer to staff guidance that can be rewritten at any time, a distinction explored in the interview below.

The CFTC, meanwhile, moved to exempt some crypto software providers from registration requirements. It has proposed a new "crypto asset market" registration category and intends to allow registered exchanges to offer leveraged trading.

The concern among some in the industry, however, is that these rules could be built on shifting sands. TD Cowen has cautioned that agency rules "are the easiest to rescind" — a point demonstrated when Trump-appointed commissioners wiped away all traces of the Gary Gensler era at the SEC. A 2024 Supreme Court decision — Loper Bright, which the interview explains in detail — also means that agency rules can now be more easily overturned by the courts.

The durability of regulator rulemaking is already being tested in court, with a community bank group suing the Office of the Comptroller of the Currency for exceeding its authority by allowing crypto firms to obtain national trust bank charters. The case is a concrete example of the broader fight over the limits of agency power — the same underlying question that hangs over the SEC and CFTC's crypto rulemaking. The picture will take shape on several fronts: the fate of the CLARITY Act in Congress, the outcome of the OCC lawsuit, and how the agencies' rules and guidance hold up in practice.

To discuss the legal issues involved, Magazine spoke with Yuriy Brisov of D&A Partners. What follows is an edited version of the conversation.

Magazine: SEC Chair Paul Atkins said after the CLARITY vote failed that the agency was releasing rules because Congress didn't. Are agencies like the SEC supposed to create rules, or are they just supposed to interpret rules that already exist?

Yuriy Brisov: They are supposed to create rules. They have this power under the Exchange Act of 1934. The SEC was created as a result of the major meltdown in the US markets at the end of the 1920s. From the moment of creation, the SEC had the power to create rules and regulations on how the laws should apply. American legislation works by creating general rules, like a frame, and then it has a watchdog watching over these regulations. There was a reason why it was created like this — so that when, say, blockchain tokens came along, the US legislation would be ready to accommodate new technology. That's what the Commission has been doing for ages now, and it's obviously within their powers.

Magazine: Can they interpret the rules in the opposite way to an SEC appointed by a previous administration?

Brisov: There should be a reason for that. They can, in theory, do that, but it should be all within the formation of the body of law. Under Gary Gensler, the Commission tried to apply these rules to tokens. It turns out that it failed because there is still vagueness, and many companies left the US market for good. This is the opening for the new Commission to oversee these rules and say, "You tried, but we can see that it's not working. So we'll offer our own rules." But the power to offer rules is limited. If they offer some regulations that would lay an unbearable economic burden on companies, or something bizarre, there are also laws that allow companies or any damaged party to challenge this regulation in court and say, "We don't like what the SEC has been doing because it's damaging the market."

In 2011, there was a case when the SEC applied new rules on how shareholders vote through a proxy. The business community said, "It's bizarre, it's burdensome, and we don't like it." That case, Business Roundtable vs SEC, was won by the business side.

Magazine: What was the Chevron decision by the Supreme Court, and how does its overturning in 2024 impact court cases about rulemaking by agencies like the SEC and CFTC?

Brisov: Chevron was a famous case of 1984. The court basically said that if the law is vague or there are uncertainties and ambiguities in the statute, then we should use the agency's interpretation as the law. In June 2024, Loper Bright was a new precedent that overruled Chevron. It's now saying that we don't have to. Of course, the SEC is a strong authority: who knows securities laws better than the SEC? But the court should use its own brains and apply the Howey case itself.

Magazine: So that makes it more likely that SEC rules could be overturned?

Brisov: In some cases, the courts can come up with a different conclusion.

You cannot just come and say "we don't like this regulation." For instance, if you're a traditional broker-dealer or traditional participant of the investment market in the United States and you say, "Look, I'm suffering because of this new regulation," you should be able to prove that there was not enough research and that it's burdensome for the business and not profitable for the US market. If they prove damages and if they prove a lack of research, then the court can overrule this regulation. From what I can see, Paul Atkins and the SEC have been consulting with many crypto firms, with VCs. They've been doing their research, so it's not something they just came up with within a day.

Magazine: Let's assume the SEC and CFTC rules survive for the next two years, and businesses invest a lot of money into infrastructure around tokenized stocks based on the new rules. Could a new SEC unilaterally reverse the rules, or would they have to take into account the businesses built on top of the old interpretation?

Brisov: They have to take them into account. If there is the potential for the US market to grow and to benefit from this regulation, they won be able to just overrule it. There is the same thought process that either an agency or a court goes through. It's called IRAC: issue, rule, analysis, conclusion. They would have to apply understandable, transparent logic.

They can't just say we don't like it. They have to explain. They have to bring up an economic background for it. They have to bring up research, and they have to prove that it's insufficient. And only then can they come to a different conclusion. For the sake of argument, we could say that Paul Atkins hates the Howey test, and he would have been happy just to abandon it — but he can't do it. In every note, he keeps repeating that the Howey case still works, that it's still a valid regulation in the United States. However, we can interpret it in this case, and in that case, differently — and this is our logic. This is what allows us to do that, he explains it transparently.

Magazine: The SEC appears to have been working on the innovation exemption for years. But it more recently came up with an FAQ saying that a crypto company buying back its own token does not make a commodity token a security. Could I be secure and comfortable launching a token buyback scheme on the basis of an SEC FAQ?

Brisov: If you follow it, and it's created by the people who know what they're saying, probably you will be in the clear. But it's not legislation. An FAQ is just like a manual. It doesn't have any authority, even for the staff.

Magazine: So the FAQ isn't saying they changed the rules; it is just saying this is what the rules are?

Brisov: It's just some extra explanation, like a casebook at university. They are staff notes — a manual that explains for the staff how they should work and how they should understand this. They rewrite them quite often.

Magazine: They rewrote the FAQ after a week because a16z's legal counsel said it left a massive loophole.

Brisov: Exactly, and that's how it should be done. It's not regulation or legislation; they can change them every week.