Crypto legislation known as the CLARITY Act failed to advance to the Senate floor after a procedural vote resulted in 49 votes in favor and 50 against, falling short of the 60 votes required. No Democrats supported the bill, citing limited ethics provisions, while some Republicans also withheld support.
Coinbase CEO Brian Armstrong pushed back against Wall Street Journal reporting that attributed the bill's failure to his opposition. Armstrong stated that he opposed an earlier draft of the legislation in January due to concerns about its treatment of decentralized finance, tokenization, CFTC authority, and stablecoin rewards. He noted that the final version sent to the Senate addressed these issues and that he strongly supported it.
Armstrong characterized the WSJ's reporting as influenced by banking interests. At the time of his January opposition, the White House had criticized Armstrong's stance, noting that he did not represent the entire crypto industry.
Some industry observers attributed the bill's failure to other factors, including ethics concerns tied to reported cryptocurrency holdings.
Regulators Advance Alternative Pathways
Following the legislative setback, the SEC and CFTC announced new rulemaking initiatives. The CFTC issued no-action relief for passive software providers, allowing self-custodial wallets to offer derivative trading without broker registration. The agency also submitted a new crypto market structure proposal that would permit existing and unregistered platforms to operate leveraged trading services.
The SEC published a five-year tokenization exemption program enabling crypto platforms to facilitate tokenized stock trading while exempting some firms from full securities exchange registration.
However, analysts noted that such regulatory approaches can be reversed by future administrations if not codified through Congressional legislation. Some industry observers expressed concern about regulatory risks if subsequent administrations adopt different crypto policies.
