Clarity Act Is Kaput, But Crypto Will Be Fine
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On Tuesday, the U.S. Senate failed to advance the Clarity Act by a vote of 49-50. All Democrats voted against the bill, including previously staunch advocates Kirsten Gillibrand (D-NY), Ruben Gallego (D-AZ), and Angela Alsobrooks (D-MD). The vote required 60+ votes to enact cloture on the motion to proceed, which then would have allowed the Senate to formally “get on the bill” (take it up for debate).
Longtime champion and bill sponsor Cynthia Lummis (R-WY) blamed Democrats, saying they “were never truly serious about protecting consumers and preserving American leadership.” Alsobrooks, who worked with Sen. Thom Tillis (R-NC) to find a compromise on the stablecoin rewards issue, pinned the failure on an inability to solve the ethics issue, saying that Democrats needed “very clear ethics in place to prevent the grift and the corruption that we have seen from this administration.”
Republican Senators Josh Hawley (R-MO) and Jerry Moran (R-KS) also voted against the bill, each citing the stablecoin yield issue. Democrat Chris Coons (D-NV) was not present for the vote. Tillis switched his vote to “No” at the last minute to enact a procedural maneuver that allows the cloture motion to be re-introduced during this Congress.
Our take
We had repeatedly cautioned the market that the odds of the bill were diminishing over time following the successful bipartisan markup in May, cutting our odds as low as 10% after the chamber failed to vote on the bill before departing for August recess. While we raised the odds to 25% on Monday after Republicans released a new draft on Sunday night that offered substantial additional concessions, we knew the chances remained low.
While the failure was not necessarily unexpected, it was certainly disappointing. Dozens and dozens of staffers, industry advocates, and administration officials have worked tirelessly for two years (and some even longer) on the landmark crypto market structure legislation, with countless changes and negotiations between stakeholders. The bill was substantially bipartisan and would have enhanced investor protections, provided new tools to combat illicit finance, and created clear rules of the road that would cement American leadership in capital markets for decades to come.
Specifically, we’d like to thank members and staffers from the offices of Sens. Lummis, Tillis, Gillibrand, Hagerty, Moreno, Scott, Thune, Boozman, Gallego, Alsobrooks, Booker, Warner, and Cortez Masto. And we want to thank and acknowledge members of the administration, particularly officials at the White House and U.S. Treasury Department, whose work on the Presidential Working Group on Digital Assets and the landmark July 2025 report Strengthening American Leadership in Digital Financial Technology has been an essential effort in advancing Clarity but also U.S. leadership in digital assets generally.
More than just the fact that the vote failed to reach the 60-vote threshold, it was the partisan nature and last-minute flame-out that was so sad to see. We had word that last-minute negotiations were trending in the right direction, but that those talks were cut short and not allowed to proceed. Whatever happened at the last minute, it was enough to push all Democrats to vote no, even those who have been longtime advocates and who had worked tirelessly (and at some political cost) to find a middle ground. We understand that there are efforts behind the scenes to revive the bill and try another vote before the Senate leaves for recess in October, but ultimately, we think the odds are very low.
Crypto will be fine without Clarity, at least for the remainder of this administration. The market and banking regulators are being quite proactive and supportive of innovation, as evidenced even this week by the CFTC releasing no-action relief to exempt front-end DeFi developers from registration requirements and the SEC releasing the long-awaited “innovation exemption” for tokenized stocks. But of course, there are things that only Congress can do. While some action is possible in the next Congress, if Democrats take either or both chambers, the odds are relatively low that Clarity will advance in the 120th Congress.
The focus now turns primarily to agency work, and there is a lot there to work on and for crypto to be excited about.
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