Crypto's Clarity Act gamble hangs by a thread as September vote approaches

The crypto industry enters September with its biggest legislative bet hanging in the balance. The Clarity Act, a market structure bill that would divide oversight of digital assets between the SEC and CFTC, faces a critical vote with little confidence it will pass before the midterm elections.

Many industry participants are resigned that the bill is dead in 2026. Senate Majority Leader John Thune has scheduled a key procedural vote for Sept. 15, after the Senate returns from recess, but unresolved issues remain.

Clarity Act faces an uphill battle

The bill would establish a framework for crypto, set registration requirements and strengthen anti-money-laundering protections. It missed its legislative window when the Senate adjourned for its August recess without voting. Unresolved issues include stablecoin rewards and ethics provisions tied to President Donald Trump and his family's crypto interests.

“I personally am a bit pessimistic about the Clarity Act being passed,” John Darsie, CEO of SALT, told CNBC at the Wyoming Blockchain Symposium in Jackson Hole in August. “Leading into the midterms, you don't often pass legislation of this magnitude.”

Arizona Sen. Ruben Gallego, one of only two Democrats voting to advance the bill out of the Senate Banking Committee, has been working on a bipartisan compromise regarding ethics language. “The way to get 60 votes is with good ethics legislation as well as rounding out some of the things that are still outstanding,” Gallego said last month.

Historic spending, but a changing regulator

The possible demise of Clarity stands in sharp contrast to the historic sums committed in the 2024 election cycle. Crypto-backed political groups spent more than $200 million, helping elect friendly candidates and making crypto regulation a mainstream issue.

Even if Clarity dies, the bet on a Trump victory is already paying off in some ways. The SEC and CFTC are more accommodating under Trump, while the Office of the Comptroller of the Currency has also moved toward a looser framework for digital assets. Trump said at a cryptocurrency summit in August that his administration is focused on creating “a clear regulatory framework for pioneers and builders.”

Industry prepares to live without Clarity

Industry leaders in Wyoming argued that crypto can continue to develop without the comprehensive market structure. SEC and CFTC rulemaking can provide more certainty, executives said.

“We've already seen some contingency planning,” said Sunayna Tuteja, former chief innovation officer at the Federal Reserve. “Not perfect, but progress nonetheless.”

Denelle Dixon, president of Stellar Development Foundation, said the next two years should be spent using existing rules so that “whichever administration takes over, we have all of this bulletproof work that we've done to show not only is it successful, but it is advantageous for us to maintain this market structure.”

Andrew McCormick, head of institutional and market development at Chainlink Labs, warned that rapid regulatory change makes it hard for firms to commit capital. “If you're looking to deploy capital and invest, and one jurisdiction has an established framework while another jurisdiction like the U.S. may be subject to, every two to four years, rapid and extreme change, it's hard to allocate capital,” he said. Formal legislation can provide certainty that survives changes in administrations and political parties.