CLARITY Act Stuck as Washington Struggles to Define Crypto Rules

• The CLARITY Act is still stalled in the Senate as lawmakers attempt to settle an ethics dispute with only a limited window to act in September.
• In the latest CLARITY Act developments, the Digital Asset Market Clarity Act remains legislation rather than law. The House approved the bill 294-134 in July 2025, but the Senate had yet to hold a floor vote or file a cloture motion before putting the measure on hold ahead of the August recess.
• Senators left Washington without taking up the crypto market-structure bill, further reducing the time available to advance it before the midterm elections.
• Senate Majority Leader John Thune said lawmakers would bring the bill to the floor in September. Senators are scheduled to return for a short session of about three weeks before heading back to their campaigns, meaning the CLARITY Act will have to compete with other legislative priorities. What happens next will depend on whether negotiators can settle the dispute that has delayed the legislation.
• Prediction markets such as Kalshi now estimate an 8% probability that the bill will pass in September, down from 10% a day earlier. Of the $6.7 million traded in the market, 54% of the volume indicates expectations that the bill will pass by July 1, 2027.

CLARITY Act News: From House Approval to Senate Hold

• The House passed the CLARITY Act with strong bipartisan backing. The Senate Banking Committee later approved its version with support from two Democrats, making the legislation eligible for Senate floor consideration in June 2026. The bill remained on the Senate Legislative Calendar through the first half of the year before being shelved in late July.
• The legislation would create legal classifications separating digital commodities from securities while dividing regulatory authority between the Commodity Futures Trading Commission and the Securities and Exchange Commission.
• Under the proposed framework, the CFTC would take primary responsibility for spot markets involving digital commodities, while the SEC would oversee assets designated as securities.
• The bill would also establish registration frameworks for digital commodity exchanges, brokers, dealers and custodians. Regulators would then develop rules covering registration requirements, capital standards, custody and business conduct.
• Additional provisions would introduce a self-certification system for networks meeting specified maturity requirements, shield non-custodial software developers from being treated as money transmitters and override conflicting state regulations involving covered digital assets and intermediaries.
• The CLARITY Act requires 60 Senate votes to overcome a filibuster. Much of the negotiation has focused on an ethics provision addressing federal officials who issue or promote digital assets while serving in office.
• Republicans introduced revised language on July 22 that would prevent federal officials, including the president, from issuing or sponsoring digital assets during their time in office. Enforcement would rest exclusively with the Justice Department, with penalties reaching $250,000 per day, and the provision would expire on January 20, 2029.
• Democrats rejected the proposal, arguing against giving the Justice Department sole enforcement authority. They have pushed for state attorneys general to have an independent enforcement role, which the Republican proposal excluded. Both Democrats who previously supported the bill in committee opposed the revised language.
• Sen. Cynthia Lummis continues to work on the legislation, while negotiations remain centered on finding common ground over the ethics provision before the Senate considers the bill.

September Could Be a Critical Window for the CLARITY Act

• The Senate’s September session gives the CLARITY Act only a narrow opportunity to advance. The bill will have to compete for floor time with appropriations deadlines and other legislative priorities, and any Senate-approved version would still need agreement from the House.
• Ian Katz, managing partner at Capital Alpha, told The Hill that the bill’s chances are weakening as September draws closer because lawmakers have only a small number of legislative days available and other issues are demanding attention. He said the legislation was not necessarily dead but described its outlook as unfavorable.
• Lawmakers could also pursue a year-end strategy. Trade publications have reported that lobbyists have considered attaching the CLARITY Act, or parts of it, to must-pass legislation such as appropriations bills or the defense authorization measure. However, no senator has publicly confirmed the approach, and such a move would not resolve the core disagreements over the bill’s votes and enforcement provisions.

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