CLARITY Act Stall Puts US Crypto Oversight Back in SEC, CFTC Hands

The failure to advance the CLARITY Act in the US Senate has handed responsibility for resolving regulatory uncertainty in the crypto industry back to the Securities and Exchange Commission and the Commodity Futures Trading Commission.

Bloomberg reported on September 15 that the Senate held a procedural vote on the bill but failed to clear the threshold needed to move consideration forward. The legislation aimed to more clearly define whether digital assets should be treated as securities or commodities, and to delineate the supervisory boundaries of the SEC and CFTC.

Crypto-linked stocks fell sharply immediately after the bill stalled. Coinbase plunged 10%, while stablecoin issuer Circle dropped more than 11%. Bitcoin also fell 5.3% intraday, slipping below $75,000.

The bill's collapse has cast doubt on the durability of the current pro-crypto regulatory push. The SEC and CFTC have eased crypto-related regulation under the Trump administration, but executive-branch rules are more susceptible to future changes than laws enacted by Congress.

"The ball is now back in the regulators' court after the bill failed," Austin Campbell, an adjunct professor at New York University's Stern School of Business, said. Regulators can still write rules, he added, but those rules offer less stability and permanence than legislation.

Even so, Wall Street firms that have already expanded their crypto businesses are not expected to change strategy immediately. Robbie Mitchnick, head of digital assets at BlackRock, said the outcome would not affect the firm's current plans or strategy. BlackRock manages IBIT, the largest spot Bitcoin exchange-traded fund in the US.

The bigger issue is new investment that has yet to be carried out. Decisions on acquisitions of crypto exchanges, custodians and asset managers by traditional financial firms, as well as broader US business expansion, could be delayed if regulatory uncertainty persists.

Brian Dixon, chief executive officer of Off the Chain Capital, said companies considering large acquisitions want a clearer regulatory framework. The SEC and CFTC could provide substantial clarity through their own rules, he said, but the rulemaking process takes time and remains vulnerable to legal disputes and policy shifts under future administrations.

The crypto market has also lost a potential catalyst. Matt Hougan, chief investment officer at Bitwise, said passage of the CLARITY Act could have been a powerful driver for the crypto market in the fourth quarter. Even so, he described the bill's failure as "more of a speed bump than a roadblock."