Clarity Act Stalls in Senate, but Crypto Policy Marches On Through Regulation

With the U.S. crypto bill missing a critical window before the Senate adjourns for summer recess, alternative paths to crypto regulation are drawing fresh attention.

The prospects for the Digital Asset Market Clarity Act have dimmed considerably after it failed to secure a procedural Senate vote this week. Still, that setback does not signal the end of the road for U.S. crypto policy. Federal financial regulators are already working to establish workable crypto frameworks, even though the likelihood of receiving congressional backing through a bespoke law this year remains slim.

A Heavy Blow, but Not a Fatal One

The legislation has hit a wall, and its chances of advancing diminish by the day. A new statute may not materialize this year to clearly delineate among crypto securities, commodities, and other asset types — or to assign responsibility for overseeing the companies that handle them. Nor may the U.S. Commodity Futures Trading Commission receive explicit authority to govern the commodity trading through which the bulk of crypto changes hands.

Before contentious disputes over stablecoin yield, illicit finance, and the crypto-related ethics of government officials threatened to derail the Clarity Act, market-structure oversight questions were the effort's central objectives. Without legislation placing the CFTC in charge of supervising the trading of tokens such as bitcoin (BTC, $64,771.02) and Ethereum's ether (ETH, $1,913.50), a significant gap in U.S. oversight will persist — though the derivatives regulator and its sister agency, the Securities and Exchange Commission, have sought to bridge some of those gaps and will retain room to act independently if Congress does not.

The most probable outcome in the absence of a crypto law: the crypto-friendly SEC and CFTC will continue issuing position statements and directing their existing authorities toward granting crypto businesses the permissions they need — for the time being. Some crypto industry insiders have already begun privately downplaying the potential loss of the Clarity Act, arguing that the sector does not require a custom-built law to keep operating in the United States, despite warnings that companies and developers may relocate offshore without legislative clarity. The European Union's Markets in Crypto-Assets (MiCA) regulation, fully in force since 2024, already provides licensed firms a unified rulebook across 27 member states — a ready alternative that has drawn growing interest from U.S.-domiciled projects weighing their jurisdictional options.

SEC and CFTC Fill the Void

The SEC has been developing a major policy initiative to clear a path for tokenized securities — envisioned as a limited sandbox for a concept that could transform how securities are traded and settled in the U.S. Major Wall Street institutions, including BlackRock and JPMorgan, have already experimented with blockchain-based fund issuance and settlement platforms, signaling significant pent-up demand for a clearer regulatory pathway. The agency has taken several months longer than initially signaled, though close observers expect it to unveil the framework in the coming weeks.

The SEC is also preparing to propose its "regulation crypto" rule, which is expected to streamline the path for crypto developers by allowing fundraising and relaxed oversight for emerging projects.

However, SEC Chair Paul Atkins has repeatedly emphasized that Congress is the only source of permanent, durable policy authority, as he stated again in a March speech.

"Only Congress can ensure that regulation in this area is future-proofed through comprehensive market structure legislation," Atkins said.

The pending SEC actions would build on a series of guidance documents from both the SEC and CFTC that have clarified how U.S. crypto businesses can operate without running afoul of regulators — covering areas including mining, memecoins, rewards programs, and several other categories. The most significant of these regulatory statements was the "taxonomy," which sought to carefully define how the agencies would categorize different digital assets and how those assets would be supervised.

Banking Regulators and the Treasury

Meanwhile, banking regulators have been rapidly granting charters to crypto firms, and the Federal Reserve has been working on tailored access to its payment rails and other services — a move designed to eliminate the banking intermediaries that digital asset companies have relied upon to serve customers. The new bank charters are expected to have some durability, even when the Office of the Comptroller of the Currency, which issues them, undergoes future leadership changes.

As the Treasury Department and its tax arm, the IRS, also implement crypto-specific policies, the overall momentum of U.S. crypto regulation becomes increasingly difficult to reverse.

The industry already secured a major victory last year with the passage of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act). Emerging from a turbulent 2022 — in which crypto markets crashed and the industry's highest-profile advocate was prosecuted for fraud — the sector managed to turn things around in Washington by securing a law governing U.S. stablecoin issuers and, for the first time, officially integrating crypto into the regulated financial system.

The powerful banking lobby had persuaded senators from both parties that the Clarity Act needed to include provisions banning stablecoin rewards programs that might compete with interest-bearing bank deposits. That lobbying campaign may have ultimately proved fatal for the bill. If so, banks are left with the GENIUS Act governing such stablecoin rewards — a framework the crypto industry argues will give it greater latitude to compete with traditional-finance incumbents.

"The bewildering thing about TradFi's extreme efforts to kill CLARITY is that they are likely accelerating their own obsolescence," said Miles Jennings, head of policy and general counsel at a16z crypto, in a Thursday post on X.

A Shifting Political Landscape

Much of Congress is already predisposed toward enacting crypto legislation, as demonstrated by the bipartisan support whenever a bill like the GENIUS Act reaches an actual vote. Those numbers are likely to keep growing as the industry pours substantial sums into backing friendly candidates. Washington is thus steadily shifting toward a more favorable crypto posture that — even without a comprehensive market-structure law — makes it harder for the federal government to reverse its recent embrace of the industry.

Still, the current Republican Party dominance — controlling the White House, both chambers of Congress, and the Supreme Court — will not last indefinitely. Odds are high that Democrats will retake the U.S. House of Representatives next year, which would hand their party control of all committee gavels and subpoena powers. That prospect is one reason some institutional investors and financial heavyweights remain hesitant to commit to the digital assets space. A significant pool of capital and financial infrastructure is likely to remain on the sidelines as long as the industry continues forward on uncertain legal footing.

Further out, in the presidential election two years from now, a Democratic victory could reshape the leadership of all the major regulatory agencies. Position statements and agency guidance are relatively easy to overturn. Policies that have passed through formal rulemaking — involving multiple stages and opportunities for public input — would prove considerably more difficult to undo. That distinction is why the pace at which the SEC and CFTC transition from guidance documents to formal rules matters beyond the immediate policy debate: rulemaking creates a more durable regulatory foundation that can survive changes in administration, while guidance and position statements can be withdrawn with comparatively little process.

The Long Game

Despite spending hundreds of millions of dollars on political influence and further millions on Washington lobbying, the crypto industry still lacks its marquee U.S. law. A definitive defeat of the Clarity Act — whether during the Senate's limited September window or the end-of-year "lame duck" session — could deliver another downturn for crypto markets, according to analysis from Bernstein.

But the sector has demonstrated years of patience, and versions of this legislative push have surfaced repeatedly, often with bipartisan energy. The earlier Financial Innovation and Technology for the 21st Century Act (FIT21) passed the House in 2024. The related Clarity Act then passed the House in 2025 before clearing another hurdle by securing approvals from Senate committees this year. If lawmakers fail to push it through this year, the market-structure bill is widely expected to reemerge.

Related: Senate won't vote on crypto Clarity Act before its summer break