Summary
- The Senate's attempt to advance the Clarity Act failed with a narrow 49-50 vote, where all Democrats opposed it alongside three Republicans. Negotiators described it as a "setback, but not the end."
- With growing frustration in the industry, attention is now directed towards regulatory agencies, with Kristin Smith from the Solana Policy Institute suggesting that agency guidance is the more feasible way forward.
- Both the SEC and CFTC are taking action: SEC Chair Paul Atkins linked a new exemption for tokenized stock innovations to the bill's defeat, while the CFTC provided no-action relief and sent a broader crypto rule proposal to the White House.
This past week was challenging for those observing the developments in crypto policy in Washington, marking a pivotal shift from congressional discussions to regulatory oversight.
On Tuesday, the Senate's effort to pass a crucial market structure bill for cryptocurrency faced a dramatic setback in a procedural vote, revealing the deep rift in bipartisan cooperation, largely influenced by past dealings of President Trump with the crypto industry.
The Senate failed to advance crypto’s landmark market structure bill.Democrats voted unanimously against the bill, while Republican Senators Susan Collins, Josh Hawley, and Jerry Moran joined them. Senator Thom Tillis initially supported the bill but switched his vote to no, allowing for a future opportunity to revisit it.
The final count was 49-50, falling short of the required 60 votes needed for advancement after extensive bipartisan negotiations over the past year.
Negotiations within the Capitol continued until just before the vote, with a Democratic staffer indicating that Tillis was open to delaying the vote for further talks, but a staffer for Senate Banking Committee Chair Tim Scott ended discussions abruptly.
This led to blame being cast on both sides: Republicans accused Democrats of lacking genuine interest in passing the bill, while Democrats claimed Republican leaders rushed the vote to protect what was described as Trump's “grift.”
Senator Cynthia Lummis, the bill's main architect, remarked, “Senate Democrats proved they were never truly serious about protecting consumers and preserving American leadership,” asserting that she engaged in good faith negotiations while Democrats were merely playing games.
However, several Democrats who voted against the bill maintained that it is not finished. Senator Angela Alsobrooks stated, “It’s not going to die. Over 70 million Americans are engaging in an unregulated industry, and we have a responsibility to regulate.”
Alsobrooks was joined by six other Democrats involved in negotiations, who collectively referred to the vote as “a setback, but not the end,” reaffirming their commitment to bipartisan efforts for the Clarity Act’s passage.
These comments came amid initial attempts to resume bipartisan discussions and assess willingness from both parties to negotiate further, according to sources privy to the situation.
Industry fatigue is palpable, with many now looking to regulatory bodies to establish guidelines instead of waiting on Congress. Kristin Smith from the Solana Policy Institute articulated this sentiment, stating, “Congress had its chance and didn’t rise to it. We’re now looking to regulators for guidance, and that’s the more viable path forward right now.”
In response to the bill's setback, SEC Chairman Paul Atkins connected the agency’s new innovation exemption for tokenized stocks directly to the failure of the Clarity Act. The SEC announced this measure, igniting excitement as it allows for tokenized U.S. stocks to trade on-chain, marking a significant regulatory movement.
The CFTC is also progressing, having issued a no-action position for passive software providers and submitted a broader crypto markets rulemaking proposal for White House review, although specifics are not yet public.
As the industry seeks clarity, it appears it will be delivered by regulators rather than Congress, albeit in a less formal manner.
Crypto in America is a newsletter written by Eleanor Terrett. Follow the link to read in full and subscribe.