The Senate on Tuesday failed to advance the Clarity Act, a major blow to the crypto industry as the legislation could become even more difficult to pass if Dems win back seats in the midterm elections.
A procedural cloture vote on the bill got 50 votes for and 49 against, widely missing the 60 votes needed to clear the hurdle as three Republicans – Sens. Susan Collins of Maine, Josh Hawley of Missouri and Jerry Moran of Kansas – voted no.
A version of the Clarity Act – or the Digital Asset Market Clarity Act – passed the House last year, but it stalled in the Senate for months as Democrats sought a more restrictive version of the bill that would, they said, block President Trump and others from profiting.
The odds of the legislation ever passing into law are only growing slimmer as the November midterms approach. If Democrats regain control of the House or Senate, it would almost certainly mean an even tougher battle ahead for the crypto bill.
The 600-page Clarity Act was an attempt to create a universal regulatory framework for the crypto industry that included oversight of the industry by the SEC and CFTC, registration requirements and anti-money-laundering rules.
Dems pushed back, arguing the legislation was too lenient and didn’t include enough protections to keep Trump and others from profiting off the industry, after the commander-in-chief made $1.4 billion from his crypto businesses last year.
Nic Puckrin, founder of Coin Bureau, said it’s no surprise the Clarity Act failed to advance, saying it has become “too much of a political hot potato.”
“This doesn’t really affect Bitcoin much, because it’s driven more by macro factors and institutional flows,” he told The Post.
But he warned that the failure to advance the crypto legislation “could definitely put some projects on ice.”
“Many altcoins and other crypto projects are now stuck in a sort of legal purgatory, with no clear regime establishing whether they are securities or commodities, and who is responsible for overseeing them,” he said.
“The SEC and CFTC will keep trying to fill the gap, but the ongoing uncertainty is a significant setback for the industry, with very little chance the legislation will pass this year.”
The Biden administration took a harsh stance against the crypto industry, cracking down on leading companies like Coinbase and Kraken and arguing they should be subject to the same strict regulations as securities traded on Wall Street.
Trump has taken a much more friendly approach to the industry, which spent more than $130 million to fund super PACs that backed pro-crypto policymakers. Critics have said the Clarity Act is an attempt to cement this overly friendly regulatory approach into law, so it can’t change again with a new administration.
Republicans released a new version of the bill on Sunday that addressed some of the concerns from Democratic senators, but it wasn’t enough to win over opponents.
Jessica Martinez, US policy director at Fireblocks, said the bill’s failure to advance won’t tank the crypto industry, but it could slow smaller institutions.
“Large institutions are already building under the existing framework, while more cautious banks and asset managers are waiting for rules they believe will survive the next court challenge or administration,” Martinez told The Post.
“Without it, adoption continues, just more unevenly and with fewer institutions willing to move at scale.”