The CFTC Plan B for Crypto Regulation: How Passalacqua Aims to Act on Crypto While the Clarity Act Stalls in the Senate

A Regulator Who Refuses to Wait

With the Clarity Act stalled in the Senate, the top US derivatives regulator is preparing a plan B. CoinDesk reported on October 16, 2026 that Michael Passalacqua of the Commodity Futures Trading Commission has outlined an alternative path for crypto regulation that does not depend on the legislation Congress has so far failed to pass.

The disclosure lands at a moment of mounting frustration in Washington. The Clarity Act — the sweeping market-structure bill meant to finally draw the line between securities and commodities jurisdiction — advanced through the House only to bog down in the Senate, where disputes over jurisdiction, consumer protections, and amendment scope have kept it from a floor vote. The stalled bill was dealt another visible setback when a key White House crypto policy advisor departed amid the legislative gridlock, as BitcoinsNews has covered. Passalacqua’s plan B is the clearest signal yet that at least one regulator is done waiting for Congress.

Rulemaking Instead of Legislation

The essence of the fallback strategy, as described by CoinDesk, is to use the CFTC’s existing authority over derivatives markets to bring structure to crypto trading through rulemaking rather than statute. Where legislation would settle foundational questions — which agency owns spot-market oversight and how tokens are classified — agency rulemaking can address the practical mechanics: how leveraged retail crypto products are offered, on what venues they trade, and what protections surround customer funds.

The approach tracks with the agency’s recent posture. This month the CFTC opened a comment period on a framework for bringing leveraged retail crypto transactions onto regulated exchanges, a move legal commentators framed as the commission laying groundwork for a derivatives-centered crypto regime. A parallel initiative reported by Yahoo Finance — a new innovation task force targeting the crypto derivatives framework — suggests the agency is organizing internally around the same goal.

The wager is straightforward: if comprehensive legislation cannot pass, the CFTC can still regulate the corners of the market Congress has already given it. Leveraged products, futures, options, and anything touching a derivatives venue fall under its jurisdiction today. By making regulated venues more attractive and offshore or unregulated venues less tenable, the agency can drag a meaningful slice of the market into the light without a single vote from the Senate.

The Limits of Going Alone

Critics are quick to point out what agency action cannot do. Rulemaking cannot resolve the foundational turf question between the CFTC and the Securities and Exchange Commission, cannot create new statutory authority over spot markets, and can be reversed by a future commission — a fragility the industry has lived through before. Bills like the Clarity Act exist precisely because stakeholders concluded that executive-branch improvisation is a poor substitute for settled law.

There is also a timing problem. Agency rulemaking is slow by design: proposed rules, comment periods, legal review, and implementation can consume years. Markets move faster. Every month of delay pushes more activity toward offshore venues and offshore regulators, which is the outcome both the CFTC and its congressional supporters say they want to avoid.

And the commission is not a monolith. Its internal debates over how aggressively to police crypto — visible in enforcement choices and dissenting statements — mean a plan B announced by one official may face friction before it becomes final policy.

Why It Matters for the Market

For crypto businesses, the message is that compliance planning cannot wait for the Clarity Act’s fate. Firms offering leveraged products to US customers should expect the regulated-exchange framework to advance through whatever channel is available — legislation or rulemaking — and position accordingly. For traders, a shift of leveraged activity onto regulated venues would bring margin requirements, disclosure standards, and insolvency protections that offshore platforms have never offered.

The industry’s own lobbying posture has split along predictable lines: derivatives-heavy venues generally welcome CFTC primacy, while spot-focused exchanges still hope for legislation that settles their regulatory home once and for all. Passalacqua’s fallback keeps pressure on both camps to engage with the commission now rather than betting everything on a Senate breakthrough.

The Bottom Line

The backdrop remains turbulent: bitcoin traded near 81,473 USD on October 17, 2026, down roughly 1.3 percent on the day, with ether around 2,430 USD and solana near 104.56 USD, per CoinGecko data, and the market watching Washington as closely as the charts. Passalacqua’s plan B is an honest acknowledgment of political reality: if Congress will not act, the CFTC will — with the tools it already has. Whether those tools are enough to bring order to crypto’s regulatory wilderness, or merely a stopgap that deepens the eventual need for legislation, will be one of the defining questions of the coming year.