The US Senate faces a 60-vote test today on the CLARITY Act, a crypto market-structure bill that would divide oversight between the SEC and CFTC. The Senate is scheduled to consider a cloture motion at 2:15pm ET on Tuesday on whether to invoke cloture on a motion to proceed to the Digital Asset Market Clarity Act, H.R. 3633. The procedural vote is the first major test of whether the bill can attract enough bipartisan support to reach formal debate. With 53 Republicans, supporters would need at least seven votes from Democrats or Democratic-caucusing independents if every Republican supports the motion. Any Republican defections would raise that number significantly. The bill cleared the Senate Banking Committee 15-9 in May, with Democrats Angela Alsobrooks and Ruben Gallego joining Republicans. Both signalled their committee votes didn't guarantee floor support, and Senate leaders have since worked to win the additional backing needed. Technically, the Republicans at night received an entire new version of the Clarity Act with 126 changes requested by the Democrats, but a day later, the Democrats sent a version back to the Republicans, and per Punchbowl News just this morning, that was entirely rejected by the Republicans. This demonstrates clearly that there is no consensus on the bill as currently drafted, and a vote for cloture would only mean continued debate rather than passage.
The CLARITY Act is facing fresh opposition from a bipartisan group of state attorneys general ahead of today's planned cloture vote. In a letter to Senate Banking Committee leaders on Monday, 18 attorneys general from various states and the District of Columbia argued that the bill could weaken states' ability to pursue crypto scams and protect investors. The coalition stated that states have brought more than 330 anti-fraud enforcement actions against crypto scammers since 2017, including cases involving fraudulent websites and schemes. The officials warned that ambiguities in the current CLARITY draft could give bad actors opportunities to challenge or delay state enforcement actions. The group also raised concerns about state licensing and registration authority over securities intermediaries and transactions, calling for narrowly tailored exemptions to preserve state authority. The attorneys general further objected to provisions they said could give the Securities and Exchange Commission (SEC) indirect preemption authority through a 'qualified transaction' provision.
The likely failure of the Clarity Act has removed one of the industry's few potential catalysts just as renewed anxiety over interest rates bears down on speculative assets, sending Bitcoin sharply lower while hammering crypto-linked stocks. Bitcoin, the largest cryptocurrency, added to earlier losses to drop as much as 5.2% to $75,010 after the bill was set to fail in the Senate. Ether also declined, falling more than 8% at one point, while some smaller tokens lost even more on a percentage basis. The double blow adds fresh momentum to a selloff that has already pushed digital assets into one of their bleakest stretches in years. For months, the industry had looked to friendlier regulation as a possible turning point, with the Clarity Act promising rules that could draw crypto further into the financial mainstream. But the bill's defeat has left that payoff elusive and exposed a more immediate problem: Washington can bring institutional legitimacy to the asset class, but it cannot force investors to embrace the volatile asset en masse.
The industry has spent years and hundreds of millions of dollars trying to bring Congress to approval of the market structure legislation, and while the Senate's vote represents the furthest such an effort has progressed so far, the reaction from industry leaders was notably measured. Crypto executives said the vote does not unwind the regulatory progress already underway at the SEC and CFTC, nor is it likely to stop banks, asset managers and crypto firms from continuing to build. As Connor Howe, Co-Founder & CEO of Enso, explained, "Falling short of the 60-vote threshold doesn't send the market back to 2022. [CFTC Chair] Selig already told CFTC staff to draft a market-structure regime under existing Commodity Exchange Act authority, and the SEC put Regulation Crypto Assets out for comment back in August." The vote leaves unresolved the question of durability, as agency rules can change with a new administration, while legislation would have given the industry a more permanent framework. Coinbase chief executive Brian Armstrong told CNBC that a defeat would still be "a good outcome" for the industry, since the SEC and CFTC have said they are ready to publish their own rules regardless of how the Senate votes. However, industry leaders noted that "Falling short of the 60-vote threshold shouldn't trigger a steep sell-off. Prediction markets had already priced in failure," as Alan Konevsky, CEO of tZERO, explained. "Without this compromise, institutional capital keeps navigating a fragmented, enforcement-heavy market," he added.
In the absence of market structure law, the industry will be focusing close attention on the federal regulators — including the Securities and Exchange Commission and the Commodity Futures Trading Commission — that are already at work on crypto rules. The SEC recently proposed its first major crypto rule — Regulation Crypto Assets, or Reg Crypto — to clear a path for crypto projects to raise money and get off the ground without immediately drawing difficult regulatory requirements. And the agency is poised to start approving a narrow version of securities tokenization that could eventually remake how securities transactions are executed in the U.S. However, even the regulator at the helm, Chairman Paul Atkins, has said the new crypto rules and exemptions from registration demands won't be durable without a law underpinning them. Much of what the agency has expressed so far on crypto policy has been in easy-to-reverse expressions of guidance, and even a formal rule can be erased in the same way it was written. Without CLARITY, the broader market lacks the statutory footing that GENIUS delivered for stablecoins, leaving firms to navigate a system where a token's treatment continues to depend on agency discretion and historical promises rather than fixed statutory law.
The setback for the crypto industry's top policy goal potentially sends the process back to the drawing board unless some long-odds maneuvers develop in the final weeks of the congressional session after November's midterm elections. "If cloture fails today, the next realistic window could be years away," as industry observers noted. "The next Congress is the likely next opportunity to address crypto market structure," as BeInCrypto reports. "The next chair can rewrite an agency rule without a single vote in the Senate, while repealing a statute takes another act of Congress." The industry faces growing international competition, with Europe operating under MiCA since December 2024, while the U.S. remains stuck relying on federal interpretations and a patchwork of state regimes. "In Europe, builders at least know the rules of the game under MiCA. The push for Clarity shows Washington knows it has a regulatory gap to close, but builders can't afford to wait around for the U.S. to get its act together," as Abhishek Vaidyanathan, Chief Legal Officer of NEAR, observed. "Blockchain technology will continue to advance because it provides real value beyond any individual crypto price," he added, suggesting that regulatory uncertainty may drive innovation toward more favorable jurisdictions.
