Rep. French Hill: SEC and CFTC Rules No Substitute for Permanent Law

House Financial Services Committee Chairman Rep. French Hill warned this week that regulatory guidance from the SEC and CFTC cannot replace comprehensive legislation, calling a "permanent law change" the only reliable path to securing U.S. leadership in digital asset markets.

Hill's remarks follow the CLARITY Act's failure to advance. The Crypto Leadership in Regulatory Clarity Act would have established a unified federal framework for digital assets, drawing clear jurisdictional lines between the SEC and CFTC and defining which tokens qualify as securities versus commodities. Without it, the two agencies have continued operating under existing statutory authority, issuing guidance and pursuing enforcement actions on a case-by-case basis.

"SEC and CFTC crypto rules are no substitute for the CLARITY Act."

Rep. French Hill, Chairman, House Financial Services Committee

Hill acknowledged that the agencies have not been idle. He credited both the SEC and CFTC for stepping in to provide regulatory direction after the CLARITY Act's collapse, but framed that effort as a stopgap rather than a solution. The distinction matters: agency rules can be reversed by the next administration, challenged in court, or revised without congressional input. Legislation, by contrast, sets durable standards that firms can build compliance programs around.

The concern is not theoretical. The absence of a statutory framework has produced what industry participants describe as fragmented compliance standards, where firms must navigate overlapping and sometimes contradictory agency positions. That fragmentation has real costs. Legal uncertainty raises compliance overhead, discourages institutional capital deployment, and pushes some projects to incorporate outside the United States. Similar dynamics preceded periods of enforcement-driven volatility in 2022 and 2023, when aggressive SEC action against exchanges and token issuers rattled markets that had no clear legislative baseline to reference. EU regulators have moved aggressively to enforce the Markets in Crypto-Assets framework, giving European firms a clearer rulebook even as U.S. companies continue operating in ambiguity.

Critics of Hill's position argue the agencies have managed effectively through existing authority and that locking in legislation risks codifying rules that cannot keep pace with fast-moving technology. There is also a practical counterpoint: congressional gridlock on crypto has persisted across multiple sessions, and agency guidance, however imperfect, at least moves faster than the legislative calendar. Some compliance officers have privately argued that a predictable enforcement posture from the SEC is preferable to waiting years for a bill that may never pass.

Hill's framing pushes back on that logic directly. Regulatory certainty derived from enforcement is not the same as regulatory clarity derived from law. Enforcement-based certainty tells firms what they cannot do after the fact. Legislation tells them what they can do from the start.

Whether Congress can deliver remains the central question. The CLARITY Act's failure reflects genuine disagreements over how to classify digital assets, how to split jurisdiction between the two agencies, and how to handle decentralized protocols that do not map cleanly onto existing securities or commodities law. Those disagreements do not disappear because a bill failed. Hill's remarks signal that the House Financial Services Committee intends to keep pressing for a legislative resolution, but the path forward through a divided legislative environment is not yet clear.