The Clarity Act, designed to split crypto oversight between the SEC and the CFTC, failed to secure the 60 votes required to end debate in the Senate. The bill aimed to build upon the previous Genius Act, which established federal regulations for stablecoins backed by the dollar. Disagreements centered on ethics enforcement and the role of the Department of Justice.
Democratic lawmakers expressed concerns regarding conflict of interest provisions, specifically questioning the bill's ability to regulate a president with personal crypto holdings. Republicans had introduced last-minute revisions to include state attorneys general in enforcement, but federal oversight remained under the DOJ. Banking lobbyists also warned that the bill's stablecoin interest payment rules could drain deposits from community banks.
Following the legislative stalemate, the SEC has initiated a pathway for trading tokenized stocks, while the CFTC submitted a crypto rulemaking proposal to the White House. Neither action holds the authority of federal law, leaving them vulnerable to legal challenges. Meanwhile, the industry super PAC Fairshake launched a $30 million campaign against Senator Sherrod Brown.
With the Senate recessing on October 5 and returning on November 9, the current legislative session concludes in early January. To pass the bill, Republicans may need to concede on independent ethics enforcement, implement stricter bans on presidential crypto investments, and reach a compromise on stablecoin interest payments to appease the banking sector.
