- The CLARITY Act remains in legislative limbo in the Senate as lawmakers attempt to settle an ethics dispute, while the September session provides only a narrow window for progress.
- The Digital Asset Market Clarity Act is still a proposal and has not become law. The House passed the measure 294-134 in July 2025, but the Senate had not conducted a floor vote or filed a cloture motion before placing the bill on hold ahead of the August recess.
- Senators departed Washington without voting on the crypto market-structure legislation, leaving a much smaller timeframe to advance the bill before the midterm elections.
- Senate Majority Leader John Thune has said lawmakers plan to consider the measure in September. The Senate is expected to return for roughly three weeks before lawmakers leave Washington for campaigning, forcing the bill to compete with other legislative priorities. Its future will largely depend on whether negotiators can overcome the dispute that has stalled the legislation.
- Prediction markets, including Kalshi, now put the probability of the bill passing in September at 8%, down from 10% the previous day. In a market with $6.7 million in total volume, 54% of participants expect the legislation to pass by July 1, 2027.
CLARITY Act Advances in House, Then Stalls in Senate
- The House approved the CLARITY Act with broad bipartisan backing. The Senate Banking Committee later advanced its own version with two Democratic votes, allowing the bill to become eligible for floor consideration in June 2026. It remained on the Senate Legislative Calendar during the first half of the year before being shelved in late July.
- The proposed legislation would establish statutory definitions separating digital commodities from securities and divide oversight between the CFTC and SEC.
- Under the framework, the CFTC would oversee spot markets for digital commodities, while the SEC would retain authority over digital assets classified as securities.
- The bill would establish registration requirements for digital commodity exchanges, brokers, dealers and custodians. The agencies would then develop rules covering areas such as capital requirements, custody standards, registration and market conduct.
- Other provisions would allow qualifying networks to use a self-certification process based on statutory maturity requirements. The legislation would also protect non-custodial software developers from money-transmitter regulations and establish federal authority over conflicting state rules for covered assets and intermediaries.
- The measure needs 60 Senate votes to clear a potential filibuster. Negotiations have largely focused on an ethics provision involving federal officials who issue or promote digital assets while holding office.
- Republicans proposed revised language on July 22 that would prohibit federal officials, including the president, from issuing or sponsoring digital assets while in office. The provision would be enforced exclusively by the Justice Department, with potential fines of up to $250,000 per day, and would expire on Jan. 20, 2029.
- Democrats rejected the proposal, arguing that enforcement should not be limited to the Justice Department. They want state attorneys general to have an independent enforcement role, which the Republican proposal does not allow. The two Democrats who supported the bill in committee also opposed the revised provision.
- Sen. Cynthia Lummis remains engaged in efforts to advance the crypto legislation. The negotiations continue to revolve around whether lawmakers can reach an agreement on the disputed ethics language.
September Window Could Decide CLARITY Act’s Future
- The Senate’s September return could represent a critical but limited opportunity for the CLARITY Act. The bill must compete with appropriations deadlines and other legislative business, and any legislation approved by the Senate would still need to secure agreement from the House.
- Ian Katz, managing partner at Capital Alpha, told The Hill that the bill’s chances are deteriorating as September approaches. With few legislative days available and competing priorities taking up floor time, Katz said the legislation is not dead but currently has limited prospects.
- A separate year-end strategy could involve attaching the CLARITY Act or selected provisions to must-pass legislation, including appropriations measures or the defense authorization bill. Lobbyists have reportedly discussed the possibility, but no senator has confirmed such a plan. Even if pursued, the strategy would not eliminate the unresolved disagreements over votes and enforcement.
