CLARITY Act Progress Falters With U.S. Crypto Rules Still Unresolved

• The CLARITY Act remains stalled in the Senate as lawmakers struggle to resolve an ethics dispute, with September presenting a limited opportunity to revive the legislation.
• The Digital Asset Market Clarity Act is still awaiting approval and has not become law. The House passed the bill 294-134 in July 2025, but the Senate did not hold a floor vote or file a cloture motion before lawmakers broke for the August recess.
• The Senate left Washington without considering the crypto market-structure bill, further tightening the timeline for action before the midterm elections.
• Senate Majority Leader John Thune has said the legislation could be taken up in September. However, senators are expected to return for only about three weeks before leaving to campaign, putting the bill in competition with other legislative priorities. Its progress will depend on whether lawmakers can resolve the dispute that has kept it on hold.
• Prediction markets such as Kalshi currently assign an 8% probability to the bill passing in September, down from 10% the previous day. Of the $6.7 million traded in the market, 54% of the volume reflects expectations that the bill will pass by July 1, 2027.

CLARITY Act Goes From House Approval to Senate Stalemate

• The House approved the CLARITY Act with strong bipartisan support. The Senate Banking Committee later advanced its version with votes from two Democrats, allowing the measure to become eligible for floor consideration in June 2026. It stayed on the Senate Legislative Calendar through much of the first half of the year before being shelved in late July.
• The bill would establish statutory definitions separating digital commodities from securities and divide regulatory authority between the CFTC and SEC.
• The CFTC would take primary responsibility for spot trading in digital commodities, while the SEC would oversee digital assets classified as securities.
• The proposal would create registration frameworks for digital commodity exchanges, brokers, dealers and custodians. Regulators would then set standards for registration, capital requirements, custody and business conduct.
• The legislation would also introduce a self-certification process for networks that meet specific maturity requirements. It would protect non-custodial software developers from money-transmitter rules and establish federal preemption over conflicting state regulations covering eligible assets and intermediaries.
• The CLARITY Act needs 60 votes in the Senate to overcome a filibuster. Negotiations have largely centered on an ethics provision covering federal officials who issue or sponsor digital assets while in office.
• Republicans released updated language on July 22 that would bar federal officials, including the president, from issuing or sponsoring digital assets while serving. The provision would be enforced exclusively by the Justice Department, with fines of up to $250,000 per day, and would expire on Jan. 20, 2029.
• Democrats opposed the proposal, arguing that enforcement should not rest solely with the Justice Department. They have called for state attorneys general to receive independent enforcement authority, which the Republican language excludes. The two Democrats who helped advance the bill in committee also rejected the revised provision.
• Sen. Cynthia Lummis remains involved in efforts to negotiate the legislation. The main challenge is finding an agreement on the ethics provision before the Senate considers the bill.

September Could Be Crucial for CLARITY Act

• The Senate’s September session provides only a narrow window for the CLARITY Act to advance. The legislation will compete for floor time with appropriations deadlines and other priorities, and a Senate-approved version would still need to be reconciled with the House.
• Ian Katz, managing partner at Capital Alpha, told The Hill that the bill’s outlook is becoming weaker as September approaches. With limited legislative days and competing issues, Katz said the legislation is not dead but currently faces an uphill battle.
• A potential year-end option would be to attach the CLARITY Act, or parts of it, to must-pass legislation such as appropriations or the defense authorization bill. Lobbyists have reportedly raised the possibility, but no senator has confirmed the strategy. Even if adopted, it would not resolve the outstanding disagreements over Senate votes and enforcement.