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The CLARITY Act is dead — for now. The Senate voted 49-50 on September 15, falling well short of the 60 votes needed to move forward, and the bill’s fate looks murky at best.
But former CFTC Chairman J. Christopher Giancarlo isn’t panicking. His read: U.S. regulators can keep building a crypto framework with the tools they already have. SEC Chairman Paul Atkins and CFTC Chairman Michael Selig are both committed to using existing agency powers to fill the void left by Congress, per Giancarlo. No new law? Fine. The agencies move anyway. That’s basically the message coming out of Washington right now, and some corners of the industry seem cautiously okay with it — even if they’d obviously prefer a clean legislative fix.
Not everyone is calm about it.
Industry Frustration Boils Over
Coinbase CEO Brian Armstrong didn’t mince words. The industry “can’t wait on Congress anymore,” Armstrong said, pushing hard for the SEC and CFTC to step in and set clear rules through their own rulemaking processes. Ripple CEO Brad Garlinghouse echoed that, urging regulators to bridge the gap that Congress left wide open. That’s two of the biggest names in crypto essentially telling Washington to get out of the way and let the agencies do their jobs. It’s a telling moment. The legislative path has been grinding for years, and patience is running thin.
The bill itself — formally H.R. 3633, the Digital Asset Market Clarity Act — had real ambitions. It aimed to draw a clean line between SEC and CFTC jurisdiction over digital assets, create registration pathways for exchanges, brokers, and dealers, and hand Treasury authority over payment stablecoins. There were also ethics restrictions targeting senior government officials. And that last piece is probably what killed it, at least for now.
Democratic lawmakers pushed hard on the ethics provisions, arguing they weren’t strong enough to handle potential conflicts of interest. The concerns were pointed, and they were enough to block the bill even after negotiators had tried to tighten enforcement powers and add restrictions. The crypto interests tied to former President Donald Trump made those ethics debates even more charged — and harder to resolve.
Republicans Who Voted No
It wasn’t just Democrats. Republican Senators Susan Collins, Josh Hawley, Jerry Moran, and Thom Tillis also voted against the motion to advance. Tillis’s vote was apparently strategic — a procedural move that leaves the door open for potential reconsideration down the road. Whether that matters in practice is unclear.
Senator John Kennedy floated the idea of revisiting the CLARITY Act in a future legislative session, maybe even a lame-duck session after the elections. Senator Ted Cruz also seems to think the bill could come back. But the Senate’s calendar is tight, and any revised version would need fresh negotiations between the House and Senate to clear the disagreements that already sank it once. That’s not a fast process. Probably not a short one either.
So the near-term action shifts to the agencies.
The SEC has already put out a proposed framework called Regulation Crypto Assets — a 402-page document that lays out specific conditions under which crypto assets can move out of investment contract status. It includes registration exemptions for issuers raising up to $5 million over a four-year period, and as much as $75 million within a rolling 12-month window. There are also conditional safe harbor provisions for certain crypto investment contracts. The SEC developed all of this while the CLARITY Act was still being negotiated, which says something about how much faith the agency was putting in Congress to deliver.
CFTC Moves on Its Own Track
The CFTC under Selig is building its own market structure proposals, designed to work within the agency’s current jurisdiction. Selig has made clear the CFTC’s rulemaking will keep moving regardless of what Congress does or doesn’t do. The goal is to manage digital asset markets effectively without waiting for a legislative green light that may not come anytime soon.
Both agencies are basically treating the congressional failure as a signal to accelerate their own work. The SEC’s Regulation Crypto Assets framework and the CFTC’s forthcoming proposals are meant to give the market some structure — registration paths, compliance conditions, clearer lines on what falls under which agency’s watch. It’s not the comprehensive legislative solution the industry wanted, but it’s something.
And it’s probably the most realistic path forward right now. A bipartisan deal on crypto market structure has been elusive for years. The ethics fight that tanked the CLARITY Act isn’t going away. The political dynamics around Trump-linked crypto interests add another layer of complexity that’s hard to legislate around cleanly. Getting 60 Senate votes in that environment was always going to be hard.
The SEC’s 402-page Regulation Crypto Assets proposal allows crypto assets to transition out of investment contract classification under specific conditions — a detail that could matter enormously for token issuers trying to figure out whether they’re dealing with the SEC, the CFTC, or both.
Frequently Asked Questions
What was the final Senate vote count on the CLARITY Act?
The Senate voted 49-50 on September 15, short of the 60 votes required to advance H.R. 3633, the Digital Asset Market Clarity Act.
What is the SEC’s Regulation Crypto Assets proposal?
It’s a 402-page framework that includes registration exemptions allowing issuers to raise up to $5 million over four years or up to $75 million within a rolling 12-month period, with conditions for crypto assets to exit investment contract status.
Why It Matters
The failure of the CLARITY Act highlights the ongoing challenges in establishing a cohesive regulatory framework for cryptocurrencies in the U.S., which could impact market stability and investor confidence. As the SEC and CFTC move forward using existing powers, the industry may face a patchwork of regulations that could hinder innovation and create uncertainty for market participants. This development underscores the need for a comprehensive legislative approach to ensure clarity and consistency in the evolving crypto landscape.
