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Senate vote leaves the Clarity Act in limbo

The Clarity Act was designed to clarify which parts of the U.S. crypto market would be regulated by the SEC and which would fall under the Commodity Futures Trading Commission (CFTC). But the bill failed to secure enough bipartisan support in a key procedural vote on the Senate floor this month. As a result, long-awaited market structure reform for an industry now worth about $3 trillion has been delayed once again.

The bill offered a broader framework than the stablecoin legislation approved last year under the GENIUS framework. Its goal was to determine which tokens and platforms in spot markets would come under which regulator’s oversight, while also drawing a legal line between the SEC and the CFTC. Without such rules, U.S. crypto spot markets continue to operate in a federal gray zone.

Why does the current uncertainty matter?

The CFTC’s role in spot markets is largely limited to fraud cases and related derivatives. On the SEC side, there is no clear and durable legal framework for how crypto-linked securities products should be regulated. Although joint warnings issued by the two agencies earlier this year outlined some boundaries, they have not created the binding structure the industry wants.

What stalled the bill?

  • The text passed the House of Representatives in July 2025 by a vote of 294 to 134, with support from 78 Democrats, but that version was not adopted as the Senate’s starting point.
  • The Senate’s decision to move forward with its own version piece by piece slowed the search for a compromise.
  • Donald Trump and his family’s crypto ties triggered a sharp political backlash over ethics provisions.
  • After Coinbase withdrew its support in January from the Senate Banking Committee version, months of wrangling followed over stablecoin yields and rewards.

The ethics issue proved especially decisive. Democrats pushed for stronger language to restrict the personal crypto interests of senior public officials, but the White House, Senate Republicans and Democrats could not agree on a common formula. Trump’s June financial disclosure, in which he said he earned $1.4 billion from crypto ventures during his first year in office, intensified the criticism. That figure accounted for more than half of his total $2.2 billion in income in 2025.

The election calendar narrowed the room for compromise

The critical Senate vote also came about six weeks before the midterm elections, making the process even harder. As the campaign atmosphere hardened, Democratic senators were reluctant to appear soft on Trump, while Republicans were equally unwilling to make concessions that could give the other side political cover. That dynamic pushed politics ahead of the bill’s technical details.

What does this mean for the market?

The Clarity Act’s setback has once again put on hold one of the crypto industry’s top priorities in the U.S.: market structure reform. Despite expectations of a crypto-friendly Congress after the 2024 elections and last year’s stablecoin legislation, a comprehensive framework for spot markets still has not been put in place.

In the short term, that means the same core question remains unanswered for companies and investors: which assets count as securities, which are commodities, and which regulator oversees which platform. As long as that uncertainty continues, licensing, compliance and new product decisions in the U.S. are likely to move more cautiously.

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