- The US Senate failed to advance the Clarity Act after it fell short of the 60 votes needed.
- Democrats raised concerns over presidential crypto interests, illicit finance, investor protection and national security.
- Senators John Kennedy and Ted Cruz said the bill could be revived during the lame-duck session after November’s midterms.
- The SEC and CFTC could provide further guidance while lawmakers consider the bill’s future.
The US Senate has failed to advance the Clarity Act towards becoming law, falling short of the 60 votes needed. The procedural vote failed 49-50, with many Democrats who had been signalling their support ultimately voting against the bill.
Senator Mark Warner criticised the bill for allowing the president to profit from crypto. He said they were close to “resolving some of the toughest outstanding issues around law enforcement and national security”, but in the end, “the failure to address this fundamental conflict of interest made it impossible for me to support moving forward”.
That is why I voted no today.
Senator Mark Warner Sen. Elizabeth Warren acknowledged the bill was a first “meaningful” attempt at US crypto regulation, but said the proposal fell short on combating illicit finance and protecting investors.
However, the bill is not dead. Warren – who could lead the Banking Committee if the Democrats win the midterms – also said she would be happy to “sit down with other Democrats, with the Republicans, and with the industry and hammer out a meaningful crypto bill”.
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Such a bill, she said, would need to protect national security and the economy while “dial[ing] back the corruption”, which would require Republicans to change their current stance.
I think we could get that done, but it will require the Republicans’ willingness to stand up to Donald Trump — and that’s a pretty tall order.
Senator Elizabeth Warren What’s Next for the CLARITY Act?
According to journalist Eleanor Terrett, Sen. John Kennedy and Sen. Ted Cruz argue that the CLARITY Act is not necessarily dead because Tuesday’s failed vote does not prevent lawmakers from reviving it later.
Kennedy expects negotiations could resume during the lame-duck session after the November elections, while Cruz hopes lawmakers can bring the bill back despite Tuesday’s setback.
For crypto, this means the US is not getting a comprehensive market-structure framework like Europe’s MiCA framework in the near term. Much will depend on whether lawmakers can agree on the ethics provisions. Meanwhile, attention will turn to whether the SEC and CFTC can step in and provide further guidance to the industry, as SEC Chair Paul Atkins has said.
He has said the SEC will move forward with a crypto agenda regardless of the outcome of the vote and that the current administration “will deliver for American investors and technological innovators”.
Read also: US Moves to Seize $61M in Crypto Linked to Sanctioned Iranian Oil Sales
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