Senate Delays CLARITY Act Vote as Crypto Market Structure Fight Moves to September

Ethics, stablecoin rewards and enforcement remain major obstacles

The CLARITY Act is intended to establish a federal framework for digital-asset markets and define how oversight is divided between the Securities and Exchange Commission and Commodity Futures Trading Commission.

Its legislative problems, however, have expanded beyond the SEC-CFTC jurisdiction question. Negotiations have become entangled in disagreements over stablecoin rewards, whether law enforcement would receive adequate tools to combat illicit finance and how the legislation should address Trump’s crypto holdings and business interests.

An unreleased ethics addendum being negotiated by Senators Thom Tillis (R-NC) and Gallego, with White House involvement, would require the president to divest from crypto-related businesses.

The proposed mechanism has also raised tax considerations. Forced divestiture could allow Trump to defer federal capital-gains taxes on affected holdings for years, while gains on replacement investments could escape taxation entirely if the assets were held until death.

Trump holds a 38% stake in World Liberty Financial through an affiliated company and would otherwise face a 20% federal capital-gains rate on relevant divestments. Commerce Secretary Howard Lutnick and Treasury Secretary Scott Bessent have used the same type of divestiture provision for their own holdings.

The proposed ethics language would also allow state attorneys general to bring enforcement actions when the Justice Department declines to enforce the measures. Whether Trump will accept the arrangement remains unresolved.

Political timing has become another obstacle. Some Senate Democrats are reluctant to vote on crypto legislation shortly before the midterm elections because of the industry’s growing political influence, while supporters see the postponement as additional time to assemble enough votes.

Confidence in passage had already weakened before the latest delay. Galaxy Research cut its estimated probability of the legislation passing this year to roughly a coin toss in June.

Crypto Council for Innovation CEO Ji Hun Kim called the postponement “disappointing” but said the broader policy direction had not changed. “Every day without such a framework pushes American users and builders offshore and leaves consumers at risk,” Kim said.

Agencies could keep advancing crypto rules without Congress

Failure of the CLARITY Act would not stop U.S. crypto regulation, but it would leave the industry without the comprehensive federal market-structure statute supporters have sought.

SEC Chair Paul Atkins has said the agency is prepared to develop crypto rules itself if Congress fails to act. The industry has generally favored legislation because administrative rules and policy interpretations can be more easily reversed by a future administration.

A central statutory gap involves how digital assets are classified and which federal agency supervises the companies handling them. Without new legislation, the CFTC would also lack explicit congressional authority over spot commodity trading where much crypto activity occurs.

The initial market-structure effort focused heavily on giving regulators clearer authority over trading in assets such as bitcoin and ether. Debates over stablecoin yield, illicit finance and government-official ethics later became major points of contention.

Absent legislation, the likely regulatory path would involve the SEC and CFTC continuing to use position statements, interpretations and existing authorities to address crypto activities. Some industry insiders have argued that companies can continue operating in the United States without a bespoke statute, while other industry figures have warned that regulatory uncertainty could push companies and developers overseas.

The SEC has also been developing a policy initiative intended to establish a route for tokenized securities through a limited regulatory sandbox. The project has taken several months longer than initially indicated, although observers cited in the source material expected it to emerge within weeks.

The agency is separately preparing a proposed “regulation crypto” framework expected to make fundraising easier for crypto developers and provide lighter oversight for emerging projects.

Atkins has nevertheless stressed the limits of agency action. “Only Congress can ensure that regulation in this area is future-proofed through comprehensive market structure legislation,” he said.

Existing SEC and CFTC guidance has addressed mining, memecoins, rewards and other crypto activities. One of the agencies’ most important policy developments has been a “taxonomy” intended to explain how different digital assets should be categorized and supervised.

Banking regulators have also been granting charters to crypto firms, while the Federal Reserve has been working on tailored access to payment rails and other services that could reduce digital-asset companies’ reliance on intermediary banks.

Treasury and the IRS are implementing crypto-specific policies as well, adding to an expanding regulatory framework that could become increasingly difficult to reverse as more measures take effect.

The crypto industry also secured a major legislative victory with passage of the Guiding and Establishing National Innovation for U.S. Stablecoins Act in 2025. The law established a framework governing U.S. stablecoin issuers and formally brought crypto into the regulated financial system following the sector’s 2022 collapse and major fraud cases.

Stablecoin rewards have since become one of the CLARITY Act’s most contentious issues. Banking interests pushed senators from both parties to restrict rewards programs that could compete with interest-bearing bank deposits, a lobbying effort that has been cited as a possible factor in the broader bill’s difficulties.

If the CLARITY Act fails, stablecoin rewards would remain governed primarily under the existing stablecoin framework, which the crypto industry argues gives digital-asset companies more room to compete with traditional financial institutions.

Miles Jennings, head of policy and general counsel for a16z crypto, criticized traditional finance’s opposition. “The bewildering thing about TradFi’s extreme efforts to kill CLARITY is that they are likely accelerating their own obsolescence,” Jennings said.

Crypto’s political influence has expanded alongside the legislative push. The industry has spent hundreds of millions of dollars on political activity and additional millions on Washington lobbying, yet still lacks its central U.S. market-structure law.

A future change in political control could also affect the durability of current policy. Agency guidance can be reversed comparatively easily, while regulations completed through formal rulemaking are harder to unwind and federal statutes offer greater permanence.

That distinction has contributed to institutional caution around digital assets, with risk-sensitive financial firms assessing whether regulations established under the current administration would survive later changes in political leadership.

A definitive defeat of the CLARITY Act during the September window or a later lame-duck congressional session could also pressure crypto markets if investors conclude comprehensive legislation will not pass during the current Congress.

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Traditional finance is already moving assets onchain

Randi Abernethy, Head of Clearing and Group Risk at Bullish Exchange, has argued that the CLARITY debate now extends beyond crypto-native companies because traditional financial institutions are increasingly moving assets and settlement infrastructure onchain.

Abernethy testified on the legislation before a House Financial Services subcommittee in July 2026.

JPMorgan has tokenized ETF holdings through a Depository Trust & Clearing Corporation production pilot, while more than 50 firms, including BlackRock and Goldman Sachs, have signed on to tokenize stocks and U.S. Treasuries through the same infrastructure.

BlackRock’s CEO has described tokenization as a way to “update the plumbing of the financial system.”

Abernethy has compared the regulatory challenge with systemic risks exposed during the 2008 financial crisis, while explicitly distinguishing tokenized assets from subprime mortgages. Her argument is that financial shocks can spread through shared infrastructure and reach institutions that were not directly exposed to the asset where the problem began. The financial crisis erased roughly $17 trillion in U.S. household wealth.

Stablecoins already create one link between digital assets and traditional markets. Abernethy said stablecoins collectively hold well over $100 billion in U.S. Treasury bills, meaning distress at a major issuer could force Treasury sales and affect funding markets relied on by conventional financial institutions.

Federal Reserve staff have flagged that type of financial-stability risk. USDC briefly lost its dollar peg in 2023 after some of Circle’s reserve assets were held at a failing bank.

International bodies have also warned that a future shock could spread more quickly than earlier financial crises because crypto markets are volatile and some areas lack clearing requirements that could contain a default before it propagates.

Fidelity, Goldman Sachs and Franklin Templeton have urged Congress to pass market-structure legislation, arguing that clearer rules would strengthen investor protection. Critics have countered that proposed protections remain too weak.

The CLARITY Act’s proposed architecture includes customer-asset segregation, conflict-of-interest management, capital-adequacy requirements, transparency rules and federal supervision, with agencies responsible for implementing more detailed regulations.

Without a federal statute, current protections include an interpretive notice categorizing 16 tokens, a collateral pilot, several no-action letters and a memorandum of understanding between two federal agencies. Those mechanisms can be changed without another congressional vote.

State protections also vary, creating different standards for investors participating in a market that operates nationally.

Abernethy has used FTX as an example of the difference between legally required protections and internal promises. FTX’s offshore exchange misused customer assets for years, while several regulated entities within the broader corporate group survived the collapse without the same customer-asset failures.

LedgerX, a CFTC-regulated exchange and clearinghouse, maintained segregated customer assets through the collapse because segregation was a regulatory requirement subject to oversight.

Abernethy summarized the contrast this way: “law held and promises broke.”

She has also argued that years of U.S. enforcement-led regulation encouraged capital and talent to migrate toward Europe, Asia and the Gulf, while companies prepared to operate with little oversight could move to still weaker jurisdictions.

Signs of movement in the opposite direction appeared as U.S. regulatory policy became clearer. Nexo returned to the United States after years away, London-based Wintermute opened a New York office, and Switzerland’s Taurus established a New York presence to serve banking clients.

Bullish was cited as another regulated model. The company is an NYSE-listed digital-asset market infrastructure firm regulated in financial centers including Frankfurt, Hong Kong and New York and is pursuing CFTC registration as a designated contract market and derivatives clearing organization.