The CLARITY Act Exchange Registration Roadmap: A 180-Day Compliance Calendar for Centralized Exchanges, Brokers, and Dealers

Key Takeaways

1. The 90-day clock starts when the CFTC adopts its expedited-registration process: the bill requires that process within 180 days of enactment, and ninety days after adoption operating unregistered is barred—so the outside compliance date is 270 days after enactment.

2. Most exchanges need two registrations: CFTC under Title IV for digital-commodity activity and SEC broker-dealer registration and Regulation ATS compliance for any surviving securities activity.

3. State licenses do not wind down: Section 308 preempts state securities law for classified digital commodities, not money-transmitter, anti-fraud, or consumer-protection regimes.

4. Sections 404 and 405 make custody a registration condition: new CEA Section 5i(h) requires an exchange to hold customer digital assets in a qualified digital asset custodian, and Section 5j’s custodian standard is largely written into the statute rather than left to rulemaking.

5. Staking is a trapdoor: the Securities Act safe harbor for custodial and ancillary staking covers only services that are exclusively administrative or ministerial, the SEC has 270 days to define which ones qualify, and exchange staking products should not be assumed to fit.

I. Bill on the Verge: Where H.R. 3633 Stands After Senate Banking Clearance

H.R. 3633, the Digital Asset Market Clarity Act,¹² is a Senate floor fight and a conference reconciliation away from becoming the most consequential reorganization of U.S. crypto market structure since the SEC applied the securities laws to digital assets in its 2017 DAO Report.³ The House passed the bill 294-134 on July 17, 2025.⁴ Senate Banking advanced it on May 14, 2026, on a 15-9 vote.⁵ The Senate Agriculture Committee’s parallel Digital Commodity Intermediaries Act, S. 3755, sits on the same reconciliation track and carries the CFTC intermediary-registration architecture on the Senate side.⁶ On August 8, 2026, Senate Majority Leader Thune filed cloture on the motion to proceed, and the first procedural vote is set for September 15, 2026; floor passage, reconciliation, and Presidential signature still lie ahead.⁷

The current text is not yet law. It is, however, enough to plan against. Pre-enactment compliance work for exchanges is statute-derived, not rule-dependent—qualified-custodian negotiations, segregation-policy drafting, board-governance documentation, and registration-stack scoping all start from statutory text in the House-passed bill, which the Senate Banking substitute does not carry forward and which Senate Agriculture’s S. 3755 tracks nearly word for word.⁸⁶ Waiting for enactment to begin compresses a 90-day compliance clock into a fire drill.

The bill speaks to three different audiences inside every U.S.-facing exchange. First, the Title IV CFTC digital-commodity intermediary registration architecture—new CEA Section 5i for exchanges, new Section 4u for brokers and dealers, Section 405’s qualified digital asset custodian standard—with the registration clock set by Title I’s Section 106.⁹¹⁰¹¹ Second, the Title III SEC registration framework—broker-dealer registration and Regulation ATS compliance for any activity touching investment contracts that survive the Section 201 exclusion.¹²¹³¹⁴ Third, Section 310’s custody-accounting mechanics, which bar the banking agencies and the SEC from requiring a custodian to carry customer digital assets as a balance-sheet liability or to hold regulatory capital against them.¹⁵ The thesis of this article is straightforward: U.S.-facing centralized exchanges face two registrations under CLARITY, not one—and the 90-day clock starts the day the CFTC adopts its expedited-registration process, not the day of enactment.

II. The Registration Cliff: What Happens 90 Days After the CFTC Adopts Its Expedited-Registration Process

Call it “The Registration Cliff.” The 90 days between the CFTC adopting its expedited-registration process and the date after which unregistered operation is barred is the operational pinch point of the entire bill. Title I’s Section 106 requires the CFTC to adopt, “by rule, regulation, or order, a process for expedited registration” of digital commodity exchanges, brokers, and dealers within 180 days of enactment.⁹ Section 106(a)(1) then provides that a person “shall not act as” a digital commodity broker, dealer, or exchange “after the end of the 90-day period beginning on the date the process described in paragraph (2) is adopted” unless registered.⁹ The statute closes no filing window and bars no late application; what it bars is operating without a registration once the 90 days run. An exchange registered under the expedited process holds provisional status; an exchange still operating unregistered on Day 91 faces enforcement exposure for operating an unregistered digital commodity exchange.¹⁰¹⁶

The math is 180 + 90 = 270 days from enactment to the outside compliance date—and the cliff is movable in only one direction. The CFTC controls when the 90 days start, because they start on adoption of the process; nothing in the statute gives the CFTC discretion to extend the 90 days once the process is adopted.⁹ Early adoption pulls the compliance date forward. Late adoption pushes it back, but nothing lengthens the 90 days once they are running. Provisional status, by contrast, has no fixed end date: under Section 106(b) a registrant stays provisional until 270 days after the final effective date of the Section 5i rulemakings. The only deadline for those rulemakings is Section 112(a)‘s global timeframe, under which the Commissions “shall” promulgate the rules the Act requires “not later than 360 days after the date of enactment” unless the Act provides otherwise; nothing fixes when the Section 5i rules take effect, so the provisional period is bounded on paper and open-ended in practice.⁹¹⁷

A practical caveat on the rulemaking-deadline side. The CFTC will write the digital commodity exchange rule from designated contract market muscle memory; the existing DCM application architecture under 17 C.F.R. § 38.3 and CEA Section 5(d)‘s 23 Core Principles is the template.¹⁸¹⁹ Practitioner analysis of DCM applications documents that the statutory 180-day review clock is conditional on material completeness, and applications routinely run “well beyond the statutory period (often north of two years)” when the agency surfaces completeness questions.¹⁹ The 90-day compliance period is statutory. The 180-day deadline for adopting the process binds the agency, and Section 106 attaches no consequence to missing it.

The counterintuitive consequence is that passage makes compliance harder in the near term, not easier. Today, exchanges operating under uncertain jurisdictional status face SEC and CFTC enforcement risk under the existing statutes, with no digital-commodity-specific registration pathway.²⁰²¹ The day CLARITY signs, registration becomes mandatory, and the 90-day clock begins counting down once the CFTC adopts its process. Latecomers face a regime designed for early filers. Early filers face a regime that does not yet have final rules. There is no comfortable seat.

III. Why You Have Two Registrations, Not One

A. The Title IV / Title III Bifurcation

CLARITY divides crypto market jurisdiction along an asset-class axis. Title IV places CFTC under positive-registration authority over digital commodity activity through new CEA Sections 5i (digital commodity exchanges), 4u (digital commodity brokers and dealers), and 5j (qualified digital asset custodians).¹⁰¹¹²² Title III preserves SEC authority over any activity touching investment contracts—the broker-dealer registration baseline under Securities Exchange Act Section 15(a), Regulation ATS compliance for an alternative trading system operated by a registered broker-dealer, and the rest of the existing securities-laws stack.¹³¹⁴ The bill explicitly contemplates dual registration. House Section 307 permits a registered broker or dealer to maintain a CFTC registration as a digital commodity broker or dealer, and a national securities exchange or ATS to maintain a CFTC registration as a digital commodity exchange.²³ That permission is the textual hook for everything that follows in this article.

The cleanest framing of the bifurcation is one most trade-press analyses get wrong. Section 201’s investment-contract-asset exclusion does not extinguish SEC jurisdiction over a token—it excludes only the asset from the definition of an investment contract, leaving the investment contract itself, and the transaction in which the asset was sold, inside the securities laws.¹² Section 202’s issuer exemption and Section 404’s spot-market registration then draw the practical line between issuer distributions and secondary spot trading.¹² The March 17, 2026 joint SEC-CFTC interpretive release addresses the same boundary: a non-security crypto asset subject to an investment contract is not itself thereby a security, but the associated investment contract continues to be transferred to subsequent purchasers in secondary-market transactions—making those offers and sales securities transactions—where purchasers would reasonably expect the issuer’s representations or promises to remain connected to the asset, and until the asset separates from those representations or promises.²⁴ SEC v. Ripple Labs split an issuer’s own XRP sales by manner of sale: institutional sales under written contracts to sophisticated buyers were unregistered offers and sales of investment contracts, while programmatic sales into blind bid/ask exchange transactions, where buyers did not know they were buying from Ripple, failed Howey’s third prong.²⁵ SEC v. Telegram Group treated the Gram Purchase Agreements and the anticipated distribution of Grams as “part of a single scheme” comprising one investment contract, on a preliminary-injunction record—directly relevant to any exchange listing a token mid-cycle whose underlying investment contract has not yet run.²⁶

The release also sets out a five-category taxonomy—digital commodities, digital collectibles, digital tools, stablecoins, and digital securities—and names sixteen example digital commodities, from Bitcoin and Ether to Solana, Cardano, Dogecoin, XRP, and Avalanche, while stating that the examples are not exhaustive.²⁴ Every token outside the examples sits in classification work the exchange has to do itself unless and until the SEC and CFTC further specify. Exchanges treating Section 201 as a wholesale jurisdictional gift to the CFTC are reading the section as if it covered the asset universe. It covers what clears the release’s classification analysis—asset by asset.

B. The “Two Registrations, Not One” Hard-Edged View

My view: any U.S.-facing exchange offering token launches, stablecoin yield products, or mixed-asset order books that include both digital commodities and investment-contract assets needs parallel SEC registration. The Big Law alerts framing this as a CFTC-only registration story are reading Section 201 as if it ejected the SEC from the order book. It does not.

A minority position deserves acknowledgment. A truly perimeter-disciplined exchange that never operates a primary market, lists only tokens that have already cleared the Section 201 jurisdictional pivot, and offers no yield, staking, or derivatives products can credibly argue CFTC-only registration is sufficient. The operational discipline required is real, and the steady-state requirement is harder than it sounds—listing committees that maintain that discipline across thousands of tokens are theoretical rather than empirical. Treat the single-registration position as a posture available to a small subset of perimeter-disciplined exchanges, not the default.

The case for parallel SEC registration runs through the SEC’s recent enforcement history. SEC v. Coinbase survived a Rule 12(c) motion for judgment on the pleadings in 2024 as to the SEC’s theory that Coinbase operated as an unregistered broker, exchange, and clearing agency for assets the SEC alleged were securities, and as to its staking program; only the Wallet-based broker claim was dismissed.²⁰ SEC v. Binance alleged that a mixed commodity-security exchange violated exchange, broker-dealer, and clearing-agency registration provisions simultaneously, and the registration claims survived a motion to dismiss in June 2024.²¹ The Commission then dismissed both actions under its new posture—Coinbase by joint stipulation on February 27, 2025, Binance with prejudice on May 29, 2025—stating in each that the dismissal reflected no assessment of the merits.²⁷²⁸ The doctrinal framework that produced those complaints did not vanish with the dismissals. SEA Section 15(a) makes it unlawful for any broker or dealer to use the mails or interstate commerce to effect transactions in any security unless registered—the trigger is broker-dealer activity, not the asset mix on the book.¹³ If your order book hosts a single ICA at any point, the SEC has a registration theory available.

Concrete examples by product line. Token launches with U.S. investor participation: Securities Act territory—absent an available exemption under Sections 3 or 4, Section 5 makes it unlawful to sell a security unless a registration statement is in effect, and to offer one before a registration statement has been filed,²⁹ and whether the token is a security is the Howey question,³⁰ even if the post-launch trading market migrates to digital-commodity status. Stablecoin yield products that promise returns from issuer activity: investment-contract analysis under Howey applies, and Howey itself makes it “immaterial” whether the property sold has intrinsic value, so reserve composition does not change the analysis.³⁰ Mixed-asset order books that list (say) 95 digital commodities and 5 ICAs: an ATS for the 5 and a digital commodity exchange for the 95. The bill does not split the order book—the exchange splits the order book.

IV. The 180/90/270-Day Rulemaking Timeline—A Pre-Enactment Compliance Calendar

The compliance calendar is fixed in statutory architecture even before any rulemaking ships. The trigger events are: Day 0 (enactment); Day 180 at the latest (the CFTC adopts its expedited-registration process, starting the 90-day clock); Day 270 at the latest (unregistered operation barred—the Registration Cliff); and, keyed to no calendar date, the final effective date of the Section 5i rulemakings plus 270 days (provisional status ends; Section 112(a) gives the CFTC 360 days from enactment to promulgate the rules, but no provision fixes their effective date).⁹¹⁰¹⁷

Day 0 is the enactment date—when the President signs CLARITY into law. Day 0 starts both the CFTC’s 180-day clock to adopt its process and the operational countdown for every exchange that has not begun pre-enactment compliance work. Day 0 is also the moment the SEC enforcement posture shifts, because the bill’s jurisdictional architecture now exists as positive law rather than as the open question it remains today.²⁰

Day 180 is the trigger that matters most for filing teams. By Day 180, the CFTC must adopt its expedited-registration process. The 90-day period runs from the adoption date—not from a Day 180 calendar marker if the CFTC acts earlier or later than the statute requires. Practitioner experience with DCM applications is that the CFTC’s own 180-day review clock does not start until an application is materially complete and is stayed while deficiencies are cured, so full reviews commonly extend well beyond the statutory period; the 90-day compliance period CLARITY sets is statutory and not subject to that elasticity.¹⁹

Day 270 is the Registration Cliff. Exchanges registered under the expedited process hold provisional status. Exchanges still operating without a registration face enforcement exposure for operating an unregistered digital commodity exchange under new CEA Section 5i.⁹¹⁰ Day 270 is the outside date by which board governance, custody contracts, segregation policies, conflict-of-interest disclosures, AML/CFT programs, and the complete Form DCE-1 registration package must be finalized—and it arrives earlier if the CFTC adopts its process before Day 180.

The provisional period has no fixed back end: Section 112(a)‘s 360-day rulemaking deadline bounds when the Section 5i rules must be promulgated, not when they take effect.¹⁷ Between registration and the final effective date of the Section 5i rulemakings, the CFTC writes the substantive rules (market surveillance technology specs, position-limit thresholds, conflict-of-interest disclosure formats, customer-asset segregation requirements), and provisional status then runs a further 270 days past that effective date.⁹ Registrants operating provisionally face an unusual compliance environment: the registration is in place, but the rules of operation are being written in real time. Enforcement actions during this period can create de facto precedent for the final rules. At the end of the 270-day tail, provisional status ends and the final rules govern in full.

V. Title IV Mechanics: Digital Commodity Exchange Under CEA § 5i; Broker / Dealer Under § 4u

The Title IV mechanics described in this section operate in parallel with—not in lieu of—the SEC ATS or broker-dealer registration requirements for any activity touching investment-contract assets.¹³¹⁴ The perimeter-disciplined exchange that has cleanly limited itself to digital-commodity-only operations can read this section as a single-track CFTC roadmap. Everyone else carries the dual-registration architecture from §III.B forward through every paragraph below.

A. What CEA Section 5i Says About Digital Commodity Exchanges

New CEA Section 5i creates a positive-registration regime: a “trading facility that offers or seeks to offer a cash or spot market in at least 1 digital commodity shall register with the Commission as a digital commodity exchange.”¹⁰ The category is novel. It is not a designated contract market (DCM), not a swap execution facility (SEF), and not a futures commission merchant (FCM)—though Section 5i borrows liberally from each. DCMs trade futures contracts; SEFs trade swaps; FCMs intermediate but do not operate matching engines. A digital commodity exchange is the new category: a spot market for digital commodities.

The registration trigger is one prong, with two exemptions. The prong is offering or seeking to offer a cash or spot market in at least one digital commodity; the exemptions, at Section 5i(a)(1)(C), are de minimis trading activity and serving only customers in a single State, territory, or possession.¹⁰ Each is narrower than industry has read in trade-press coverage. A trading facility is a trading facility whether the matching happens on a centralized front-end or at the protocol level. Outsourced matching does not take an operator outside the definition if the operator is the one offering the market. The single-State exemption is the only self-executing geographic carve-out; Section 5i(i)(2) adds a discretionary one, under which the Commission “may exempt, conditionally or unconditionally,” a foreign exchange it “finds” is “subject to comparable, comprehensive supervision and regulation on a consolidated basis” by its home-country authorities.³¹ Otherwise the geography runs the other way: a single-State book is exempt; an offshore platform reaching U.S. customers is not. The enforcement record on offshore reach predates the bill. The BitMEX consent order recites that U.S. customers reached the platform through VPNs, that BitMEX knew it, and that the remedial certification requires blocking U.S. persons “unless and until BitMEX obtains required registrations from the Commission”; the Binance court rejected an extraterritoriality defense because the complaint alleged domestic transactions under the irrevocable-liability test, and treated the allegation that Binance purported to bar U.S. customers while purposefully encouraging them to circumvent the restriction as indicating that the defendants “themselves believed they were engaged in domestic transactions,” even though those allegations “do not go to where or when irrevocable liability was incurred.”³²²¹ Reactive geofencing is not a registration substitute.

Existing CFTC architecture supplies most of the operational template. CEA Section 5(d) lists 23 Core Principles for DCMs—compliance, anti-manipulation, trade monitoring, position limits, financial integrity, audit trail, governance, conflicts, financial resources, system safeguards, recordkeeping—and 17 C.F.R. Part 38 operationalizes each.¹⁹ CFTC will adapt these principles for digital commodity exchanges with modifications for the asset class (custody mandates under Section 405; settlement architecture; surveillance technology calibrated to on-chain transaction patterns).²² The BitMEX enforcement framework, which alleged DCM, SEF, and FCM violations against an offshore venue serving U.S. customers, supplies the floor: prosecution under existing CEA mechanics against unregistered venues was happening before CLARITY, and CLARITY converts that enforcement pressure into mandatory positive registration.³² CFTC v. Bankman-Fried drove the point home with a $12.7B consent judgment in restitution and disgorgement against FTX and Alameda; commingling and misappropriation of customer funds was the conduct underlying the fraud findings, and Section 402’s qualified-custodian mandate is the statutory response.³³³⁴

Activities outside the Section 5i perimeter include genuinely non-custodial DeFi activity (the Section 409 exclusion, the CEA counterpart of Section 309’s Exchange Act exclusion); foreign exchanges with no U.S. customers and prospective IP-plus-KYC geofencing in place pre-launch (a defensible posture, in contrast to the reactive blocking the BitMEX and Binance records describe); and futures-trading platforms registered as DCMs or SEFs under existing CEA architecture, though those platforms still need separate Section 5i registration for any spot-market activity.³⁵³²²¹ Futures-trading CEXes with existing CFTC FCM or futures-broker registrations may grandfather elements of their compliance architecture (capital adequacy, governance, conflict-of-interest policies), but “digital commodity exchange” is a new category requiring full re-registration. National Futures Association membership—mandatory for FCMs—is orthogonal to Title IV and carries over.

B. CEA Section 4u: Brokers and Dealers

New CEA Section 4u creates parallel registration regimes for digital commodity brokers (agency intermediaries) and digital commodity dealers (principal counterparties).¹¹ The principal/agent distinction tracks securities-law architecture but operates under CFTC authority. A broker takes orders and routes them to an exchange or other counterparty; a dealer holds inventory and trades against its customers. A firm can be both, neither, or only one. The registration tracks are independent.

Why broker registration is independent from exchange registration matters operationally. A pure broker who routes customer orders to a Section 5i registrant exchange does not need Section 5i registration—but does need Section 4u broker registration, plus AML/CFT compliance, plus customer-asset segregation and qualified-custodian holding under new CEA Section 4u.³⁶ A proprietary trading shop that buys and sells digital commodities for its own account without taking customer orders may need only Section 4u dealer registration. An exchange that routes some customer orders externally for liquidity purposes is operating in both a Section 5i capacity (the home exchange) and a Section 4u capacity (the routing function), and likely needs both registrations.

Beyond firm-level registration, personnel licensing creates a second tier of compliance work the trade press largely ignores. Personnel licensing follows CFTC architecture, not SEC: NFA Bylaw 301 makes registration under the CEA, or provisional registration, a temporary license, or an exemption, a condition of NFA membership and of association with a member, and new CEA Sections 5i and 4u route digital commodity brokers and dealers, and any digital commodity exchange that accepts customer funds required to be segregated, into registered-futures-association membership.³⁷¹⁰¹¹ Existing FINRA-registered staff who plan to operate inside a Section 5i registrant should expect NFA registration on top of FINRA registration during the provisional period, and the CFTC may publish modified proficiency requirements for digital-asset operations. CFTC has not yet published the digital commodity exchange registration form; the analysis throughout this article anticipates the form will be styled “Form DCE-1” or a similar designation. My expectation is that its conflict-of-interest block will be templated on Part II of SEC’s Form ATS-N, the operator-and-affiliate conflicts disclosures.³⁸

Bank Secrecy Act compliance—FinCEN MSB registration, AML program, customer identification, suspicious activity reporting—is statutorily orthogonal to Title IV registration. There is no statutory credit; an MSB-registered firm still files Form DCE-1 on its own merits. The harmonization opportunity sits at the program level: AML/CFT programs designed to satisfy FinCEN MSB requirements can be tailored to also satisfy CFTC AML/CFT expectations under the integrated Section 5i framework.

VI. The Custody Mandate: Qualified Digital Asset Custodian Requirements Under §§ 402 and 405

Section 405 is the CFTC-side custody architecture. It adds CEA Section 5j, which defines who qualifies as a qualified digital asset custodian: a person holding digital assets for a CEA registrant or its customers who satisfies one of two supervision branches—“supervision and examination for custody and safekeeping of digital assets” by a federal banking agency, the NCUA, the CFTC, or the SEC, or “adequate supervision and appropriate regulation” by a state bank supervisor, a state trust-company regulator, a state credit union supervisor, or the custodian’s home-country authority—and who has not been barred by its supervisor from digital-asset custody and shares information with the CFTC on request. For the state and foreign branch, Section 5j(d)(1) fixes what adequate supervision means: at a minimum, review of character and fitness, capital “sufficient for the financial integrity of the person,” customer-asset protection, books and records, audited financials, AML and cybersecurity policies, business continuity, and complaint resolution.²² The must-use obligation for exchanges sits in new CEA Section 5i(h), which requires a digital commodity exchange to hold each unit of a customer’s digital assets in a qualified digital asset custodian; Section 4u imposes the same duty on brokers and dealers, and Section 402 extends it to futures commission merchants by amending CEA Section 4d.³⁶³⁴ Further CFTC definition of the standard is permissive, not mandatory: Section 5j(d)(2) provides that the Commission “may” further define adequate supervision and appropriate regulation.²² Section 310 then bars the banking agencies and the SEC from requiring a supervised custodian to carry custodied digital assets as a balance-sheet liability or to hold regulatory capital against them—codifying at the statute level relief the SEC staff had already granted by withdrawing SAB 121, which had called for a platform safeguarding customer crypto-assets to present a safeguarding liability and a corresponding asset at fair value, and which SAB 122 rescinded effective January 30, 2025.¹⁵³⁹ Together, the sections create a custody architecture that the existing crypto custody market is not yet operationally ready to satisfy. Begin LOI-stage negotiations with at least one QDAC candidate now.

The standards the CFTC is likely to layer on Section 5j’s statutory minima track the existing FCM segregation framework, adapted for digital assets. My expectation: capital adequacy calibrated to assets under custody; cybersecurity and custody-control expectations informed by the CFTC’s December 2025 tokenized-collateral pilot, whose no-action position lets FCMs accept bitcoin, ether, and USDC as customer margin collateral during the first three months of reliance, subject to weekly reporting, and whose guidance topics include segregation, custody, and control arrangements;⁴⁰ insurance coverage minimums (likely a multiple of average daily assets under custody, with specified deductible structures); independent audit (likely annual SOC 2 Type II with quarterly attestations); conflict-of-interest segregation between custody and proprietary trading; and bilateral disaster-recovery protocols. An exchange operating dual registrations should assume that the SEC-side custody obligations attaching to its broker-dealer operations sit alongside Section 5j, not inside it; the regimes are additive, not substitutable.

For exchanges using third-party custodians, the contract architecture matters at three levels. First, the custodial-services agreement itself: segregation by customer, bankruptcy-remote structuring (true bailment language; explicit non-rehypothecation; UCC Article 8 securities-entitlement framework where applicable); custody-specific service-level agreements with credit-event triggers; and termination-for-cause provisions for cybersecurity failures. Second, the operational integration: API-level architecture for order-driven custody movements, audit trails meeting CFTC Core Principle requirements, and reconciliation procedures matching the exchange’s books to the custodian’s records. Third, the financial assurance: minimum insurance coverage explicitly named in the agreement, capital adequacy representations and warranties, and ongoing financial-condition reporting from the custodian to the exchange’s risk management function.

For exchanges self-custodying, the segregation requirements of new CEA Section 5i(d) govern: customer money, assets, and property “shall be separately accounted for and shall not be commingled with the funds of the digital commodity exchange,” and Section 5i(h) still requires each unit of a customer’s digital assets to sit in a qualified digital asset custodian.³⁶ Customer assets must be segregated from house funds, identifiable on a per-customer basis, and not commingled with operational liquidity. The FTX consent order is the cautionary template: commingling and misappropriation of customer funds was the conduct at the core of the $12.7B judgment’s fraud findings, and Section 5i(h)‘s qualified-custodian mandate and Section 5i(d)‘s segregation requirement are the statutory answer, with Section 402 carrying the parallel rule for futures commission merchants.³³³⁶³⁴ Self-custody operationally requires the same security architecture a third-party QDAC would deploy—hot-wallet thresholds, multi-signature governance, hardware security module key management, withdrawal-velocity controls—plus the segregation accounting that demonstrates per-customer asset traceability. Self-custody is available only to an exchange that itself qualifies as a qualified digital asset custodian—Section 5j(c)(3) directs the CFTC to write rules permitting a CFTC registrant to qualify—and it is not cheap.²²

VII. The Three Trapdoors

Call them “The Three Trapdoors.” Each is a structural consequence of statutory text—not a discretionary risk an exchange can opt out of by careful drafting. Two are statutory in origin (Trapdoors #1 and #3); one is an operational consequence of dual-registration architecture (Trapdoor #2). All three need active management.

A. Token-Status Mid-Cycle Reclassification

Trapdoor #1 is statutory. Section 201’s exclusion is asset-specific and transaction-linked: an investment contract asset is a digital commodity that can be exclusively possessed and transferred person to person without necessary reliance on an intermediary, is recorded on a blockchain, and is sold or transferred pursuant to an investment contract.¹² Whether the blockchain system behind a token is a “mature blockchain system”—one “not controlled by any person or group of persons under common control”—turns on Section 101’s definition and Section 205’s certification requirements, and a token listed today on a mature-system footing can lose that footing if the issuer or an affiliate re-takes control: a major issuer-driven roadmap commitment, an unexpected treasury distribution to insiders, or a reorganization of token economics that reintroduces an expectation of profit from issuer efforts.⁴¹ The joint interpretive release makes the same point from the securities side: the investment contract associated with a non-security crypto asset continues to travel with the asset in secondary transactions until the asset separates from the issuer’s representations or promises.²⁴

SEC v. Telegram’s “single scheme” finding is the doctrinal anchor.²⁶ The court treated the Gram Purchase Agreements and the anticipated public distribution of Grams as a single integrated investment contract for Securities Act registration purposes, on a preliminary-injunction record. By analogy, an exchange listing a token mid-cycle inherits the purchase agreement’s registration consequences: even a token nominally trading on a commodity-exchange order book may revert to ICA status if the underlying investment contract has not yet exhausted, or if issuer conduct in the secondary phase re-triggers the Howey analysis.

The operational implication is straightforward. Your listing committee needs continuous status monitoring, not point-in-time classification. The committee must (i) document the basis for initial commodity classification at listing; (ii) monitor issuer conduct on a quarterly basis for managerial actions that defeat mature-blockchain status or reattach the investment contract; (iii) re-evaluate classification when material network or governance events occur; and (iv) build delisting and dual-listing protocols for the case in which an asset reverts to ICA status mid-trading. Treating digital-commodity status as a binary lifetime classification is the structural error.

B. Mixed-Asset Order Books

Trapdoor #2 is an operational consequence of dual-registration architecture, not a standalone statutory requirement. Securities Exchange Act Section 15(a) makes it unlawful for a broker or dealer to effect securities transactions through interstate commerce without registering.¹³ An order book that lists 95 digital commodities and 5 ICAs is functioning as an alternative trading system for the 5 ICAs and as a digital commodity exchange for the 95 digital commodities—simultaneously. The bill does not split the order book. The exchange splits the order book.

The operational implications cascade through every layer of the exchange’s architecture. Separate matching engines (or, more commonly, segregated logical pools within a unified matching engine with regulatory tagging and audit trails). Separate clearing processes (ATS-cleared trades vs. Section 5i-cleared trades, with separate qualified-custodian custody for any ICA-side custody). Separate market data feeds (because securities-side trades carry NMS-Reg-style consolidation expectations while commodity-side trades do not). Separate market surveillance protocols (because the manipulation patterns and reporting expectations differ across the two regimes). Separate customer-disclosure regimes for the two asset classes—at minimum, the existence of dual registration must be disclosed.

The Binance enforcement record is the cautionary template: the SEC alleged that operating a mixed commodity-security exchange without parallel SEC registration constituted simultaneous exchange, broker-dealer, and clearing-agency violations.²¹ CLARITY does not exempt the operator from this analysis—it codifies the registration pathway for the commodity side while preserving the securities-side registration requirement intact.

C. Ancillary Staking Services

Trapdoor #3 is statutory, and it is a securities-side trapdoor. Section 101 adds to the Securities Act an “end user distribution” definition whose safe harbor covers “the provision of custodial or ancillary staking services” only where those services “are exclusively administrative or ministerial in nature,” and directs the SEC, within 270 days of enactment, to issue rules defining which “custodial and ancillary staking services” qualify.⁴² The rulemaking draws the boundary of a safe harbor; it does not regulate the product. And neither DeFi exclusion helps a CEX: Section 309’s Exchange Act exclusion and Section 409’s CEA counterpart reach software that facilitates a user’s own self-custody, not an intermediary holding customer staked assets.³⁵ Staking-as-a-service offered through a U.S.-facing CEX is inside the safe harbor only if the service is exclusively administrative or ministerial; the discriminator is the character of the service, not custody as such, and the SEC’s rules will draw the line.

The architectural distinction worth flagging is between hybrid CEX/DEX models with custodial features and genuinely non-custodial app-chain architectures. A dYdX v4-style hybrid that retains some custodial element (sequencer-controlled liquidity, off-chain order book with custodial settlement, or staking-pool custody) sits inside Title IV registration as a digital commodity exchange and outside the staking safe harbor for its custodial staking products. A genuinely non-custodial app-chain—one where the protocol holds no customer assets and exercises no managerial control—may sit inside Section 309’s DeFi exclusion. The distinction is custody, not branding. The “we’re DeFi” label is not a registration defense if the operator retains any custodial role.

Exchanges offering yield-bearing staking, restaking, or liquid-staking products should not assume those products survive by default. The 270-day rulemaking defines how narrow “exclusively administrative or ministerial” is, and every product feature outside that line—discretionary validator selection, yield smoothing, rehypothecation of staked principal—is a feature the safe harbor does not cover. Plan for the rulemaking to constrain the product, not enable it.

The product distinctions matter because staking product managers tend to bundle them. Delegated staking—the customer’s tokens remain on the customer’s books, the exchange operates the validator—sits closest to the non-custodial pole and may survive with minimal restructuring under the staking rulemaking. Liquid staking—the exchange issues a derivative liquid-staking token against staked principal—adds an investment-contract layer that may itself be a security under Howey analysis, especially where the liquid-staking token trades secondary on the exchange’s order book. Restaking—re-pledging staked principal across multiple validation services—concentrates risk and is the furthest from anything administrative or ministerial. Dual-token staking, where the customer earns yield denominated in a second asset (often the issuer’s governance token), folds an investment-contract analysis into the yield mechanic and frequently fails the Section 201 ICA exclusion at the secondary-yield level. Audit each product separately against the safe harbor; do not assume the staking carve-out is a category exemption.

VIII. Provisional Status vs. Final Registration: The Open-Ended Window

Provisional status is the operating posture an exchange holds from registration under the expedited process until 270 days after the final effective date of the Section 5i rulemakings.⁹ The status is registered, not unregistered—which means enforcement authority attaches in full—but pre-final-rule, which means the operating standards are, in my reading, an evolving blend of statutory floors, existing CFTC architecture (DCM, SEF, FCM), SEC ATS standards (for any dual-registered operations), and whatever interim guidance the CFTC publishes along the way.

The provisional period is harder than most exchange GCs assume. The statutory floor applies from the day of registration, whatever the state of the rulemaking. Operating provisionally without meeting it (customer-asset segregation under new CEA Section 5i(d); a qualified digital asset custodian under Sections 5i(h) and 5j; core-principles compliance derived from existing 17 C.F.R. Part 38 architecture) creates enforcement risk that final rules cannot retroactively cure.

There is an administrative-law attack worth flagging for completeness: provisional-status enforcement during a period when the final rules have not been written may be set aside under 5 U.S.C. § 706(2) as arbitrary and capricious, or as in excess of statutory authority, if the agency departs materially from announced interim standards.⁴³ The retroactive-rulemaking attack is real and should be preserved for peripheral or novel-theory claims. It is not, however, a safe harbor for core statutory compliance. The Section 5i(h) custody mandate, the Section 5i(d) segregation requirement, and the SEA Section 15(a) broker-dealer registration baseline are all statutory—not rule-dependent—and enforceable from Day 0 of registration. Core compliance is statute-derived; peripheral compliance is rule-dependent.

The risk dimension most exchanges underestimate is the precedent-setting effect of enforcement actions during the provisional window. Cases settled or adjudicated during the provisional period effectively shape final-rule interpretation. Regulatory staff who handle the early provisional-status cases bring their interpretive choices into the final-rule drafting. Be the exchange whose first regulatory contact involves a constructive engagement on policy, not a settlement on an enforcement action. The SEC’s parallel rulemaking trajectory matters here too: Commissioner Peirce’s December 17, 2025 statement, “And Then Some,” on the request for information regarding national securities exchanges and alternative trading systems trading crypto assets signals that the SEC-side registration framework is itself in flux during this same window.⁴⁴ A material change in the SEC’s registration approach can shift the operating economics for any dual-registered exchange.

IX. How Likely Is This to Change Before It Becomes Law: Reconciliation Forecast

Big Law alerts treat the bill text as fixed. It isn’t. The reconciliation between Senate Banking’s reported substitute, Senate Agriculture’s parallel S. 3755, and the House-passed text still has to clear the floor and a conference; the first cloture vote is set for September 15, 2026.⁷ The forecast below is my own calibrated judgment on each exchange-facing provision, formed against the filed texts and the reported reconciliation positions as of the dates noted.⁴⁵⁴⁶

Translation for exchange GCs. First, build the registration calendar with high confidence. The 180/90/270 mechanics appear in substantially identical form in House Section 106 and Senate Agriculture’s S. 3755 Section 104, which is the strongest reconciliation signal in the bill.⁹⁶ Second, reserve state-MTL operational flexibility for the § 308 narrowing scenario. Plan to keep your state-MTL stack live; treat federal preemption as additive, not displacing. Some industry counsel have argued Section 308 reaches state money-transmitter laws⁴⁷; I do not read the text that way. Third, treat the QDAC framework under Sections 405 and 310 as stable for vendor contracts and reserve architecture. Fourth, flag the Section 101 mature-blockchain definition, Section 205’s control thresholds, and the Section 201 exclusion⁴⁸⁴¹ for sensitivity testing in any token-listing committee work; the joint March 2026 release’s decentralization definition is stricter than the bill’s, and the Ripple record shows the perimeter gets litigated asset by asset.

The stablecoin-yield fight over the Senate texts’ Section 404—which flipped from “Preserving Rewards for Stablecoin Holders” in the January manager’s amendment to “Prohibiting Interest and Yield on Payment Stablecoins” in the reported substitute—is the bill’s hottest fault line, but it affects exchanges only indirectly through listing decisions. (Article 3 of this series covers it directly.)⁴⁹⁸ The Senate Banking majority’s January 13, 2026 “Myth vs. Fact” document defends the bill’s jurisdictional allocation between the SEC and CFTC and its joint SEC-CFTC advisory committee as closing regulatory gaps rather than creating them—useful as adversarial framing the article anticipates and answers.⁵⁰

X. If This Version Becomes Law: The 90-Day Registration Cliff Translated Into Day-by-Day Compliance

Assume for purposes of this section that the House-passed Title I and Title IV text—which Senate Agriculture’s S. 3755 tracks—becomes law unchanged.¹⁶ The statutory trigger is any trading facility offering a spot market in at least one digital commodity, which captures most existing U.S.-facing CEX operations.¹⁰ Registration is mandatory; the bill’s only self-executing geographic exemption is for a single-State book, the Section 5i(i)(2) foreign-exchange exemption is the Commission’s to grant on a comparability finding,³¹ and the BitMEX and Binance records show that reactive geofencing is not a registration substitute.³²²¹

Day 0—enactment. Form the CFTC-readiness working group spanning GC, Compliance, Risk, Treasury, and Technology. Audit every product line against the Section 5i digital-commodity-exchange perimeter and the Section 201 ICA exclusion. Begin LOI-stage QDAC negotiations with at least two candidates (one bank-eligible under Section 310, one non-bank). Draft the conflict-of-interest disclosure framework and the customer-asset segregation policy from new CEA Section 5i(d) as the controlling baseline, using the futures-commission-merchant regime under CEA Section 4d as the drafting template.³⁶ Document the listing-committee process and re-evaluate every listed asset against the joint SEC-CFTC March 2026 five-category taxonomy.²⁴

Day 180 at the latest (the CFTC adopts its process; the 90-day clock starts). File the anticipated CFTC exchange-registration form—to be styled by the agency under its expedited-registration process, likely as “Form DCE-1” or a similar designation. Submit the complete registration package: custody arrangements (signed QDAC agreement or executed LOI plus binding commitment), customer-fund segregation proofs (audited reconciliation of customer assets to per-customer ledger), conflict-of-interest disclosures (templated from SEC Form ATS-N where applicable), and AML/CFT program documentation. Registration under the expedited process carries provisional status. For dual-registered operations, file broker-dealer registration and the Form ATS or Form ATS-N filing in parallel on the SEC track.¹³¹⁴

Day 270 onward (provisional period; rulemaking tracking). Unregistered operation is barred; provisional status is active and runs until 270 days after the final Section 5i rules take effect.⁹ Monitor CFTC final rules on market surveillance technology requirements, anti-fraud and anti-manipulation protocols, position-limit thresholds, and customer-disclosure formats. Build the required trading-halt and reporting infrastructure to interim standards. Budget for ongoing compliance—annual SOC 2 Type II audits, market-surveillance technology vendor contracts, dedicated compliance headcount (CFTC and SEC sides where applicable), and counsel for the final-rule comment period.

Key risk under the unchanged-text scenario: Section 308 narrowed in conference produces parallel state-MTL compliance burdens layered on top of federal Title IV registration. Plan for state-MTL maintenance even under the unchanged-text scenario; treat the unchanged version as the floor, not the ceiling, of regulatory burden. Key opportunity: if the CFTC’s expedited-process pathway proves faster and cheaper than SEC broker-dealer registration for the commodity-only operations, exchanges that file early may secure a competitive advantage over latecomers facing fully-developed final rules.

XI. What to Do Today: Pre-Enactment Compliance Architecture

A. Pre-Enactment Posture (Now Through Floor Action)

Form the cross-functional CFTC-readiness team now: General Counsel, Compliance, Risk, Treasury, and Technology. The Treasury function carries more weight than exchange GCs typically appreciate—qualified-custodian financial assurance, capital-adequacy planning, and reserve architecture all sit on Treasury’s side of the org chart, and Treasury is where Section 405 and Section 310 mechanics get operationalized.²²¹⁵ Audit every trading product against the Title IV jurisdictional perimeter and the Section 201 ICA exclusion. Begin LOI-stage QDAC negotiations with at least one bank-eligible custodian and one non-bank custodian. Draft the conflict-of-interest and segregation policy framework—the segregation policy is statute-derived under new CEA Section 5i(d), and the custodian standard under Section 5j is largely statutory, so both can be authored without waiting for final rules.³⁶²²

The SEC enforcement environment between now and enactment also matters. SEC-side exposure does not pause while Congress works. The joint March 2026 interpretive release keeps the investment-contract analysis alive for secondary trading, and the Ripple, Coinbase, and Binance records show what an exchange-side registration case looks like even where the Commission later chose not to press it.^24252021 Coordinate any pre-enactment SEC-track work (broker-dealer registration scoping, ATS architecture, ICA-listing-policy audits) with the CFTC-track work. The window between now and floor action is when most of the operational planning matters; the post-enactment 90-day clock is for executing a plan, not building one.

B. Day 0 Deliverables (Day of CLARITY Signature)

CFTC registration-readiness checklist complete. QDAC agreement signed or LOI executed. Customer-notification plan drafted in plain English explaining what registration changes for the customer’s account experience. Internal compliance training module live for trading, customer service, and risk operations staff. Personnel-licensing inventory complete (which staff already hold NFA registration; which need to acquire it during the provisional period). Board governance materials drafted (charter amendments, conflict-of-interest policy, independent-director representation analysis).

C. Day 180 Deliverables (The CFTC Adopts Its Process; The 90-Day Clock Starts)

File the anticipated CFTC exchange-registration form (likely “Form DCE-1”) or the applicable broker/dealer form. Submit signed QDAC agreements, SOC 2 Type II audit documentation (or an audit timeline acceptable to staff), AML/CFT program documentation, and all conflict-of-interest disclosures. Registration carries provisional status. For dual-registered operations, file broker-dealer registration and the Form ATS filing on the parallel track. Submit the complete personnel-licensing roster with NFA registrations pending or complete. Ninety days from this date is the Registration Cliff.

D. Day 270 Onward (Provisional Period; Rulemaking Tracking)

Monitor CFTC final rules on market surveillance technology, anti-fraud and anti-manipulation protocols, position limits, and customer-disclosure formats. Submit comment letters during the public-comment windows with practitioner-grade specificity—generic “the framework is welcome” comments are useless; detailed examples of how proposed mechanics fail or succeed for actual exchange architectures get incorporated into final rules. Implement required trading halts and reporting procedures as interim standards crystallize. Budget for ongoing compliance: annual SOC 2 audits, market-surveillance technology vendor contracts, dedicated compliance headcount, and counsel retainer for the comment-period engagement.

The 90-day clock starts the day the CFTC adopts its expedited-registration process—not the day of enactment. Every architecture decision the next nine months can move forward on statute-derived ground: custody contracts, segregation policies, board governance, personnel-licensing inventory, conflict-of-interest disclosures. The exchange that builds the application stack now is the exchange that files in Week 1 of the window. The exchange that waits for final rules is the exchange that files with two months left on a 90-day clock, against a Section 405 QDAC market that has not absorbed a registration cohort of this size at this speed. That is not a posture any GC wants to argue from.

Astraea Counsel works with exchange GCs and CCOs on the full dual-track application stack—CFTC Title IV scoping, SEC Title III parallel registration where ICAs touch the order book, QDAC architecture under Sections 310 and 405, and the personnel-licensing inventory across NFA and FINRA. Scope a Registration Readiness Assessment with us to map your current state-MTL footprint, custody architecture, and expected post-enactment token-listing profile against the 180/90/270 calendar. Intake is exchange-readiness-scoping.

Related Resources

• The DeFi Decentralization Test Under CLARITY: A Mechanics Guide to Section 309’s Control-Surface Analysis (Article 2 of this series)
• The Stablecoin Issuer’s Dual-Framework Roadmap: GENIUS Act PPSI Compliance and the Pending CLARITY Act Yield Compromise (Article 3 of this series)
• The CLARITY Act: CFTC and SEC Jurisdictional Divisions Explained (foundational hub)
• Qualified Crypto Custodians: Regulatory Requirements 2025 (cross-reference for Section 405 QDAC framework)
• Crypto Exchange License: State Requirements 2025 (cross-reference for state-MTL footprint under Section 308 narrowing scenario)

Footnotes

1. H.R. 3633, Digital Asset Market Clarity Act of 2025, 119th Cong. (engrossed in the House, July 17, 2025), available at https://www.congress.gov/bill/119th-congress/house-bill/3633/text. Section numbers in this article are the House-engrossed text’s unless the Senate text is named. ↩ ↩²

2. Paul Tierno, Congressional Research Service, Insight IN12583, “Crypto Legislation: An Overview of H.R. 3633, the CLARITY Act” (Sept. 30, 2025), available at https://www.congress.gov/crs-product/IN12583. ↩

3. SEC, Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934: The DAO, Exchange Act Release No. 81207 (July 25, 2017) (determining that DAO Tokens are securities and that a platform trading them must register as a national securities exchange or operate under an exemption; not an adjudication). ↩

4. Office of the Clerk, U.S. House of Representatives, Roll Call 199, On Passage, H.R. 3633 (July 17, 2025) (294 yea, 134 nay), available at https://clerk.house.gov/Votes/2025199. ↩

5. Jesse Hamilton, “Clarity Act Clears U.S. Senate Committee, on Its Way to a Final Test in Congress,” CoinDesk (May 14, 2026), available at https://www.coindesk.com/policy/2026/05/14/clarity-act-clears-u-s-senate-committee-on-its-way-to-a-final-test-in-congress. ↩

6. S. 3755, Digital Commodity Intermediaries Act, 119th Cong. (reported by the Senate Committee on Agriculture, Nutrition, and Forestry, Feb. 2, 2026), available at https://www.congress.gov/bill/119th-congress/senate-bill/3755/text (§ 104, expedited registration and provisional status, tracking House § 106; Title II, registration of digital commodity intermediaries). ↩ ↩² ↩³ ↩⁴

7. “Senate Keeps Clarity Act Alive With Crypto Bill Vote Set for September,” Decrypt (Aug. 8, 2026), available at https://decrypt.co/375174/senate-keeps-clarity-act-alive-with-crypto-bill-vote-set-for-september (Senate Majority Leader Thune filed the motion to proceed and cloture on H.R. 3633; first procedural vote set for 2:15 p.m. ET, Tuesday, September 15, 2026). ↩ ↩²

8. Senate Banking Comm., Amendment in the Nature of a Substitute to H.R. 3633 (EHF26031, print undated; released Jan. 12, 2026), available at https://www.banking.senate.gov/imo/media/doc/market_structure_draft.pdf; Senate Banking Comm., Reported Substitute to H.R. 3633 (EHF26374, print undated; reported after the May 14, 2026 markup). Neither Senate Banking print carries the CFTC intermediary-registration architecture of the House text’s Title I § 106 and Title IV; their Title IV is “Responsible Banking Innovation,” and their § 404 moved from “Preserving Rewards for Stablecoin Holders” (EHF26031) to “Prohibiting Interest and Yield on Payment Stablecoins” (EHF26374). ↩ ↩²

9. H.R. 3633 § 106(a)–(b) (expedited registration for digital commodity exchanges, brokers, and dealers: the CFTC “shall adopt, by rule, regulation, or order, a process for expedited registration” within 180 days of enactment; a person “shall not act as” a digital commodity broker, dealer, or exchange “after the end of the 90-day period beginning on the date the process described in paragraph (2) is adopted” unless registered; a registrant “shall be in provisional status until” 270 days after the final effective date of the CEA § 5i or § 4u rulemakings). ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸ ↩⁹ ↩¹⁰ ↩¹¹

10. Commodity Exchange Act § 5i(a)(1), as added by H.R. 3633 § 404 (“A trading facility that offers or seeks to offer a cash or spot market in at least 1 digital commodity shall register with the Commission as a digital commodity exchange”; exemptions for de minimis activity and single-State facilities at § 5i(a)(1)(C)); CEA § 1a, as amended by H.R. 3633 § 103 (definition of “digital commodity exchange”); CEA § 5i(a)(2)(B)(i) (registered-futures-association membership). ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷ ↩⁸ ↩⁹

11. Commodity Exchange Act § 4u, as added by H.R. 3633 § 406 (digital commodity broker and dealer registration); CEA § 1a, as amended by H.R. 3633 § 103 (definitions of “digital commodity broker” and “digital commodity dealer”). ↩ ↩² ↩³ ↩⁴

12. H.R. 3633 § 201 (defining “investment contract asset” as a digital commodity that “can be exclusively possessed and transferred, person to person, without necessary reliance on an intermediary, and is recorded on a blockchain” and is sold or transferred pursuant to an investment contract, Securities Act § 2(a)(36)(A)–(B); and excluding the asset—not the investment contract—from the definition of “investment contract”); see also H.R. 3633 § 202 (issuer exemption for primary transactions in digital commodities), § 404 (CFTC registration of spot markets). ↩ ↩² ↩³ ↩⁴

13. Securities Exchange Act § 15(a)(1), 15 U.S.C. § 78o(a)(1) (unlawful for “any broker or dealer” to use the mails or any means of interstate commerce to effect transactions in any security unless registered). ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶

14. 17 C.F.R. § 242.300 et seq. (Regulation ATS); see 17 C.F.R. § 242.301 (an alternative trading system shall comply with the rule’s requirements, including registration as a broker-dealer and the Form ATS filing). ↩ ↩² ↩³ ↩⁴

15. H.R. 3633 § 310 (the federal banking agencies, the NCUA, and the SEC “may not require” a depository institution, national bank, credit union, trust company, broker, or dealer to include custodied assets not accounted for as its own as a balance-sheet liability, or to hold regulatory capital against them except as necessary to mitigate operational risk). ↩ ↩² ↩³

16. CFTC v. Ooki DAO, No. 3:22-cv-05416 (N.D. Cal. June 8, 2023) (default judgment; DAO liable as an unregistered futures commission merchant and for off-exchange leveraged retail commodity transactions; the CEA’s nationwide-service provision reaches an operator with sufficient contacts with the United States as a whole). ↩

17. H.R. 3633 § 112(a) (“Unless otherwise provided in this Act or an amendment made by this Act,” the CFTC and the SEC “shall” promulgate the rules “required of each Commission under this Act or an amendment made by this Act not later than 360 days after the date of enactment of this Act”); neither CEA § 5i nor § 4u fixes its own rulemaking deadline or an effective date for the rules. ↩ ↩² ↩³

18. 17 C.F.R. § 38.3 (designated contract market application procedures); see also Form DCM, 17 C.F.R. pt. 38, app. A. ↩

19. Commodity Exchange Act § 5(d), 7 U.S.C. § 7(d) (23 Core Principles for designated contract markets); 17 C.F.R. Part 38 (DCM operational requirements); see Katten Muchin Rosenman LLP, So You Want to Apply to Become a CFTC-Registered Designated Contract Market (DCM)? Here’s What You Should Know (Nov. 20, 2025), available at https://katten.com/so-you-want-to-apply-to-become-a-cftc-registered-designated-contract-market-dcm-heres-what-you-should-know (documenting that DCM applications routinely run “well beyond the statutory period” and that the 180-day review clock does not start until an application is materially complete). ↩ ↩² ↩³ ↩⁴

20. SEC v. Coinbase, Inc., 726 F. Supp. 3d 260 (S.D.N.Y. 2024) (denying in large part a Rule 12(c) motion for judgment on the pleadings; SEC sufficiently pleaded that Coinbase operated as an exchange, broker, and clearing agency and offered securities through its staking program; Wallet-based broker claim dismissed), dismissed by joint stipulation, No. 1:23-cv-04738 (S.D.N.Y. Feb. 27, 2025). ↩ ↩² ↩³ ↩⁴

21. SEC v. Binance Holdings Ltd., 738 F. Supp. 3d 20 (D.D.C. 2024) (registration claims proceed; rejecting an extraterritoriality defense on allegations of domestic transactions under the irrevocable-liability test, and noting that allegations that defendants “purposefully encouraged” U.S. customers to circumvent platform restrictions “do not go to where or when irrevocable liability was incurred, but they do indicate that defendants themselves believed they were engaged in domestic transactions,” id. at 74 & n.29), dismissed with prejudice by joint stipulation, No. 1:23-cv-01599 (D.D.C. May 29, 2025). ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷

22. H.R. 3633 § 405 (adding CEA § 5j: a qualified digital asset custodian is a person holding digital assets for a CEA registrant or its customers, § 5j(a), that is subject either to “supervision and examination for custody and safekeeping of digital assets” by an appropriate federal banking agency, the NCUA, the CFTC, or the SEC, § 5j(b)(1), or to “adequate supervision and appropriate regulation” by a State bank supervisor, a State regulator of nondepository trust companies, a State credit union supervisor, or an appropriate foreign home-country authority, § 5j(b)(2); that has not been prohibited by its supervisor from digital-asset custody and shares information with the Commission, § 5j(c)(1)–(2); “[f]or purposes of subsection (b),” adequate supervision and appropriate regulation mean at a minimum the standards at § 5j(d)(1)(A)–(I); the Commission “may, by rule, further define” those terms, § 5j(d)(2); and the Commission “shall prescribe rules to permit” a CFTC registrant to be a qualified digital asset custodian, § 5j(c)(3)). ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶ ↩⁷

23. H.R. 3633 § 307 (adding Exchange Act § 15(p): a registered broker or dealer “shall be permitted to maintain a registration” with the CFTC as a digital commodity broker or dealer, and a national securities exchange or an alternative trading system “shall be permitted to maintain a registration” with the CFTC as a digital commodity exchange). ↩

24. SEC & CFTC, Application of the Federal Securities Laws to Certain Types of Crypto Assets and Certain Transactions Involving Crypto Assets, Release Nos. 33-11412; 34-105020, 91 Fed. Reg. 13714 (Mar. 17, 2026) (effective Mar. 23, 2026), available at https://www.sec.gov/files/rules/interp/2026/33-11412.pdf (five-category taxonomy; sixteen illustrative digital commodities; a non-security crypto asset does not become a security by being subject to an investment contract, but the associated investment contract continues to be transferred in secondary transactions until the asset separates from the issuer’s representations or promises). ↩ ↩² ↩³ ↩⁴ ↩⁵

25. SEC v. Ripple Labs, Inc., 682 F. Supp. 3d 308, 324–30 (S.D.N.Y. 2023) (institutional sales under written contracts “constituted the unregistered offer and sale of investment contracts,” id. at 328; programmatic sales were “blind bid/ask transactions” in which buyers “could not have known if their payments of money went to Ripple,” so the record “does not establish the third Howey prong,” id. at 328); see Gino Matos, “Second Circuit Court Officially Dismisses Ripple-SEC Appeals, Ending Four-Year Legal Battle,” CryptoSlate via Yahoo Finance (Aug. 22, 2025), available at https://finance.yahoo.com/news/second-circuit-court-officially-dismisses-192900751.html (reporting the Second Circuit’s mandate dismissing the parties’ cross-appeals on their joint stipulation). ↩ ↩²

26. SEC v. Telegram Grp., Inc., 448 F. Supp. 3d 352, 367 (S.D.N.Y. 2020) (granting preliminary injunction; finding that the Gram Purchase Agreements and the anticipated distribution of Grams by the initial purchasers to the public “are part of a single scheme” comprising a single investment contract subject to the Securities Act’s registration requirement). ↩ ↩²

27. SEC Press Release No. 2025-47, SEC Announces Dismissal of Civil Enforcement Action Against Coinbase (Feb. 27, 2025), available at https://www.sec.gov/newsroom/press-releases/2025-47 (joint stipulation of dismissal; the decision “rests on its judgment that the dismissal will facilitate the Commission’s ongoing efforts to reform and renew its regulatory approach to the crypto industry, not on any assessment of the merits of the claims alleged in the action”). ↩

28. SEC Litigation Release No. 26316, SEC Announces Dismissal of Civil Enforcement Action Against Binance Entities and Founder Changpeng Zhao (May 29, 2025), available at https://www.sec.gov/enforcement-litigation/litigation-releases/lr-26316 (joint stipulation to dismiss with prejudice; “the Commission determined that the dismissal of this action is appropriate” in the exercise of its discretion and as a policy matter). ↩

29. Securities Act of 1933 § 5(a), (c), 15 U.S.C. § 77e(a), (c) (“[u]nless a registration statement is in effect as to a security,” it is unlawful to sell it; and it is unlawful to offer to sell or buy a security “unless a registration statement has been filed as to such security”); exemptions at 15 U.S.C. §§ 77c, 77d. ↩

30. SEC v. W. J. Howey Co., 328 U.S. 293, 301 (1946) (an investment contract exists where “the scheme involves an investment of money in a common enterprise with profits to come solely from the efforts of others,” and if the test is met it is “immaterial whether the enterprise is speculative or non-speculative or whether there is a sale of property with or without intrinsic value”). ↩ ↩²

31. Commodity Exchange Act § 5i(i)(2), as added by H.R. 3633 § 404 (the Commission “may exempt, conditionally or unconditionally, a digital commodity exchange from registration under this section if the Commission finds that the digital commodity exchange is subject to comparable, comprehensive supervision and regulation on a consolidated basis by the appropriate governmental authorities in the home country of the facility”). ↩ ↩²

32. CFTC v. HDR Glob. Trading Ltd. (BitMEX), No. 1:20-cv-08132 (S.D.N.Y. Aug. 10, 2021) (consent order; $100 million civil monetary penalty, half offset by a parallel FinCEN consent; DCM, SEF, and FCM violations by an offshore venue whose U.S. customers accessed the platform through VPNs, ¶ 27; certification that U.S. persons remain blocked “unless and until BitMEX obtains required registrations from the Commission,” ¶ 50). ↩ ↩² ↩³ ↩⁴

33. CFTC v. Bankman-Fried (FTX Trading Ltd.), No. 1:22-cv-10503 (S.D.N.Y. Aug. 7, 2024) (consent order; $8.7 billion in restitution and $4 billion in disgorgement; commingling and misappropriation of customer funds as the conduct underlying findings of fraud under CEA § 6(c)(1) and Regulation 180.1). ↩ ↩²

34. H.R. 3633 § 402 (amending CEA § 4d(a)(2) and (f)(3)(A)(i) to provide that futures commission merchant customer property that is a digital asset “shall be held in a qualified digital asset custodian”). ↩ ↩² ↩³

35. H.R. 3633 § 309 (adding Exchange Act § 15H, excluding enumerated decentralized finance activities from that Act; preserving the Commission’s anti-fraud and anti-manipulation authorities); H.R. 3633 § 409 (adding CEA § 4v, the parallel CEA exclusion; preserving the CFTC’s anti-fraud, anti-manipulation, and false reporting enforcement authorities). Neither exclusion reaches an intermediary holding customer assets; the custody item in each covers software facilitating “an individual user’s own personal ability to keep, safeguard, or custody the user’s digital assets or related private keys.” ↩ ↩²

36. Commodity Exchange Act § 5i(d)(2), as added by H.R. 3633 § 404 (customer money, assets, and property of a digital commodity exchange “shall be separately accounted for and shall not be commingled with the funds of the digital commodity exchange”); CEA § 5i(h) (a digital commodity exchange “shall hold in a qualified digital asset custodian each unit of a digital asset” that is customer property); CEA § 4u, as added by H.R. 3633 § 406 (parallel holding and segregation duties for digital commodity brokers and dealers); cf. CEA § 4d(a)(2), 7 U.S.C. § 6d(a)(2) (futures commission merchant customer property “shall be separately accounted for and shall not be commingled with the funds of such commission merchant”), as amended by H.R. 3633 § 402. ↩ ↩² ↩³ ↩⁴ ↩⁵ ↩⁶

37. NFA Bylaw 301, Requirements and Restrictions (membership eligibility and Associate registration conditioned on registration, provisional registration, temporary license, or exemption under the CEA and the Commission’s rules), available at https://www.nfa.futures.org/rulebooksql/rules.aspx?Section=3&RuleID=BYLAW%20301. ↩

38. SEC Form ATS-N, filed pursuant to 17 C.F.R. § 242.304 (Rule 304 under the Securities Exchange Act of 1934); see Part II (Activities of the Broker-Dealer Operator and its Affiliates). ↩

39. SEC Staff Accounting Bulletin No. 121, 17 C.F.R. pt. 211 (Mar. 31, 2022) (staff view that an entity safeguarding platform users’ crypto-assets should present a safeguarding liability, and a corresponding asset, measured at fair value), rescinded by Staff Accounting Bulletin No. 122 (Jan. 23, 2025) (effective Jan. 30, 2025), available at https://www.sec.gov/rules-regulations/staff-guidance/staff-accounting-bulletins/staff-accounting-bulletin-122. ↩

40. CFTC Press Release No. 9146-25, Acting Chairman Pham Announces Launch of Digital Assets Pilot Program for Tokenized Collateral in Derivatives Markets (Dec. 8, 2025), available at https://www.cftc.gov/PressRoom/PressReleases/9146-25 (no-action position permitting FCMs to accept bitcoin, ether, and USDC as customer margin collateral during the first three months of reliance, subject to weekly reporting; guidance topics include eligible tokenized assets, legal enforceability, segregation, custody and control arrangements, haircuts and valuation, and operational risks). ↩

41. Securities Act of 1933 § 2(a)(31), as added by H.R. 3633 § 101 (“mature blockchain system” means a blockchain system, together with its related digital commodity, “that is not controlled by any person or group of persons under common control”); H.R. 3633 § 205 (adding Exchange Act § 42, mature blockchain system requirements, including the 20 percent distributed-ownership criterion at § 42(c)(2)(G)). ↩ ↩²

42. Securities Act of 1933 § 2(a)(30)(B)(iii), (C), as added by H.R. 3633 § 101 (“end user distribution” includes “the provision of custodial or ancillary staking services” only where such services “are exclusively administrative or ministerial in nature”; “[n]ot later than 270 days after the date of the enactment of this paragraph, the Commission shall issue rules defining the custodial and ancillary staking services”). ↩

43. 5 U.S.C. § 706(2)(A), (C), (D) (a reviewing court shall set aside agency action found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law,” “in excess of statutory jurisdiction, authority, or limitations,” or “without observance of procedure required by law”). ↩

44. Hester M. Peirce, Comm’r, U.S. Sec. & Exch. Comm’n, And Then Some: Request for Information Regarding National Securities Exchanges and Alternative Trading Systems Trading Crypto Assets (statement, Dec. 17, 2025), available at https://www.sec.gov/newsroom/speeches-statements/peirce-12172025-then-some-request-information-regarding-national-securities-exchanges-alternative-trading-systems. ↩

45. The §IX forecast is the author’s calibrated judgment, not a reported figure. Inputs: the House-engrossed text; Senate Banking’s January 12, 2026 manager’s amendment and May 2026 reported substitute; S. 3755 as reported February 2, 2026; and reported reconciliation positions, including the CoinDesk markup coverage cited at note 20 and the August 8, 2026 cloture filing cited at note 45. ↩

46. The §IX probabilities are the author’s calibrated judgment under the note 33 inputs; none is a reported figure, and none rests on a statement attributed to a regulator or a senator. ↩

47. H.R. 3633 § 308 (state preemption; covered-security treatment under NSMIA for digital commodities; § 308(b) preserves state securities-commission authority under Securities Act § 18(c)(1)). ↩

48. H.R. Comm. on Fin. Servs., “Section-by-Section: Digital Asset Market Clarity (CLARITY) Act of 2025” (July 10, 2025), available at https://financialservices.house.gov/uploadedfiles/2025-07-10_-_sbs_-_clarity_act_of_2025_final.pdf. ↩

49. H.R. 3633 § 404 (digital commodity exchange registration). CRITICAL DISAMBIGUATION: This is the House-passed Section 404—a CFTC exchange-registration provision. It is NOT the Senate Banking texts’ Section 404, a stablecoin-yield provision (“Preserving Rewards for Stablecoin Holders” in the January 12, 2026 manager’s amendment; “Prohibiting Interest and Yield on Payment Stablecoins” in the reported substitute) that sits in a different (not-yet-reconciled) Senate text and is addressed in Article 3 of this series (Stablecoin Issuer Dual Framework). Articles conflating the two are mis-citing the statute. ↩

50. Senate Banking Committee Majority, “Myth vs. Fact: The CLARITY Act” (Jan. 13, 2026), available at https://www.banking.senate.gov/newsroom/majority/myth-vs-fact-the-clarity-act. ↩