U.S. Senate blocks CLARITY Act, frustrating crypto industry
The CLARITY Act, which was intended to create the first federal regulatory framework for digital assets in the U.S., failed to clear a procedural vote in the Senate. Following the setback, crypto industry representatives said they are now looking to the SEC and CFTC for new rules.
According to Cointelegraph, one of the main points of disagreement involved ethics restrictions for government officials and their families. Democrats pushed for stricter rules amid concerns over President Donald Trump’s crypto investments and business interests, as well as those of his family. Ahead of the vote, Republicans introduced an updated version of the CLARITY Act with additional restrictions, but the changes were not enough to secure the required support.
The bill was designed to determine how oversight of digital assets would be divided between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). After the failed vote, that issue remains unresolved at the federal level.
The market also reacted to the Senate’s decision. Bitcoin briefly fell below $75,000 after the vote, losing more than 5% on the day. Shares of crypto-related companies also came under pressure.
Crypto companies turn to regulators
Industry representatives believe that, in the absence of new legislation, the SEC and CFTC will now play the key role. Fireblocks U.S. policy director Jessica Martinez said the company would continue engaging with both regulators.
Ripple CEO Brad Garlinghouse also expects the SEC and CFTC to continue issuing rules to partially fill the legislative gap. SEC Chair Paul Atkins had earlier reiterated his intention to make crypto market rules clearer.
However, regulatory guidance does not provide companies with the same degree of certainty as federal legislation. NEAR Chief Legal Officer Abhishek Vaidyanathan noted that businesses remain dependent on decisions made by individual agencies and their current policies. This complicates long-term planning, including budgeting for 2027.
CLARITY Act could still return for another vote
The failed procedural vote does not formally end work on the CLARITY Act. Senator Thom Tillis initiated a procedure that could allow the Senate to reconsider the motion to end debate.
However, Congress has little time left, with the November 3 midterm elections and the end of the current session approaching. As a result, industry representatives are divided over whether the bill can return to a vote before the end of 2026. Some market participants expect another attempt, while others believe discussion of a comprehensive digital asset market structure may shift to the next Congress.
Why the CLARITY Act matters
The U.S. crypto market currently operates without a unified federal regulatory framework. One of the main issues is the division of authority between the SEC and CFTC: how a particular digital asset is classified determines which agency oversees it and what requirements companies must follow. The CLARITY Act is intended to remove that uncertainty by defining which assets are securities and which are digital commodities.
The bill also sets requirements for market participants, including disclosure, customer protection, and measures to combat manipulation and illegal activity. The goal is to replace the current fragmented system with a single set of rules that would allow crypto companies to understand in advance what regulators require from them.
It was previously reported that the U.S. crypto sector could face a regulatory delay if the CLARITY Act stalled in the Senate.
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