The CLARITY Act failed to advance in the US Senate on September 15 after senators voted 49-50 on a procedural motion to move forward with the bill. The legislation needed 60 votes to proceed.
Main Points of Disagreement
The central dispute centered on ethics provisions for senior officials with cryptocurrency holdings. Republicans proposed requiring officials with a "significant financial interest" in crypto companies to either sell that interest or place it in a qualified blind trust. Democrats countered with a demand that officials with a "very large interest" must sell completely, eliminating the blind-trust option.
Democrats also sought to expand ethics restrictions to include children of covered officials, a change particularly relevant given links between Trump family members and World Liberty Financial. Republicans rejected this expansion on Tuesday morning.
A third major disagreement involved enforcement. Earlier Republican proposals gave the Justice Department primary enforcement authority, which Democrats argued created a conflict of interest. The final Republican draft assigned state attorneys general a role in enforcement, though Democrats contended the mechanism still concentrated too much authority within federal administration.
Additional unresolved issues included stablecoin rewards policies, with banks expressing concerns that rewards could divert deposits from traditional lenders. Democrats also sought stronger protections against money laundering and illicit finance in DeFi regulations.
Market Reaction
Cryptocurrency prices declined during and before the Senate vote. Bitcoin fell more than 5%, Ethereum dropped more than 6%, and XRP lost roughly 12% at one point. Coinbase and Circle shares fell as much as 10%. Market pressure also came from rising US Treasury yields above 5%, oil prices surging above $100, and anticipation of a Federal Reserve interest-rate decision on September 16.
Path Forward
The bill remains stalled but not necessarily dead. Republican Sen. Thom Tillis switched his vote to "no" at the end of Tuesday's vote, preserving a procedural route for reconsideration if negotiators reach a compromise. Senators could attempt another procedural vote before October 5 if Republicans and Democrats resolve their differences. If the legislation is not passed before the current Congress ends in January 2027, lawmakers would need to introduce it again in the next Congress.
