The CLARITY Act failed to clear the Senate on Tuesday, falling short of the 60 votes required to advance in a 49-50 vote. The outcome shifts attention on U.S. crypto market regulation from Congress to federal regulators, with the SEC and CFTC now moving ahead on rules covering tokenized stock trading, software relief, and broader market oversight. The bill is a market structure measure — one intended to draw a clearer line between SEC and CFTC authority over digital assets.

The bill needed 60 votes to proceed — the threshold required to cut off debate and advance most legislation in the Senate. Democrats opposed it, joined by three Republicans: Sens. Susan Collins, Josh Hawley, and Jerry Moran. Sen. Thom Tillis later switched his vote, a move that preserves a procedural path for the bill to come up again.

Senate Vote Ends With Talks Still Open

Tuesday's vote followed more than a year of bipartisan negotiations on Capitol Hill. Talks continued in the Capitol basement shortly before senators voted, according to Crypto In America. A Democratic staffer said Tillis supported delaying the vote to allow more negotiations.

Those talks were then ended without explanation by a staffer for Senate Banking Committee Chair Tim Scott. Democrats and Republicans subsequently offered differing accounts of the breakdown. Sen. Cynthia Lummis, the bill's chief architect, said Democrats were not serious about consumer protection. Democrats involved in the negotiations, meanwhile, kept the door open to further discussions.

Democrats Say Clarity Act Talks Can Continue

Sen. Angela Alsobrooks said after the vote that the bill was not dead, citing the more than 70 million Americans who engage with the industry. She was joined by Sens. Kirsten Gillibrand, Mark Warner, Cory Booker, Catherine Cortez Masto, Ruben Gallego, and Raphael Warnock. The group characterized the vote as a setback but not the end.

According to three sources familiar with the discussions, early efforts to restart talks have already begun. Lawmakers are now assessing whether both parties will return to the negotiating table.

SEC and CFTC Move Ahead With Crypto Rules

The stalled legislation has drawn attention to regulatory action in the meantime. Solana Policy Institute President Kristin Smith said the industry now looks to regulators for guidance. SEC Chairman Paul Atkins tied the agency's new innovation exemption directly to the Senate's failure.

The SEC released the measure on Thursday, establishing a pathway for tokenized U.S. stocks to trade onchain. The CFTC, meanwhile, issued a no-action position — staff guidance that it will not recommend enforcement against described activity — covering passive software providers.

The CFTC has also sent a broader crypto markets rulemaking proposal to the White House for review, a standard administrative step before agencies publish the full text of proposed rules. Details of that proposal remain undisclosed. The move came after the Senate vote shifted attention from congressional negotiations toward regulators.