Crypto Industry’s CLARITY Act Faces Major Setback

The crypto industry’s long-delayed, highly anticipated CLARITY Act just ran into another problem. House Republican leadership has canceled the chamber’s planned voting weeks of September 21st and 28th, meaning lawmakers will return on September 14 for just four days before leaving Washington until after the midterm elections. With the Senate scheduled to begin work on its version of the bill on September 15, the chances of CLARITY reaching President Donald Trump’s desk before the midterms have become extremely slim.

The House’s move came from Republican leadership after lawmakers passed a stopgap spending bill that reduced the immediate need to keep members in Washington. Majority Whip Tom Emmer’s office notified Republicans that the final two September voting weeks were being removed from the calendar. Speaker Mike Johnson said members were “jostling a lot of different priorities right now,” while Rep. Morgan Griffith said it made little sense to keep passing bills that were then “languishing in the sauna of the Senate.”

That leaves the Senate with a particularly awkward deadline. Senators are scheduled to vote on a procedural motion to advance CLARITY on September 15. Even if cloture succeeds, the Senate would still need to complete consideration of the bill and pass it. Because the Senate is working from a version that differs from the legislation previously approved by the House, the two chambers would also have to resolve those differences before the bill could reach President Trump.

Trump Made Crypto a Priority. Congress Has Had a Harder Time

Crypto has been a major focus of the Trump administration. The president previously signed an executive order establishing a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile, directing the government to retain certain bitcoin acquired through forfeiture and allowing Treasury and Commerce to explore budget-neutral ways of acquiring additional bitcoin. An earlier executive order also created a Presidential Working Group on Digital Asset Markets and instructed it to develop a federal regulatory framework for digital assets.

Congress did manage to pass the GENIUS Act last year, establishing a federal regulatory framework for stablecoins, which have become a key development in the greater adoption of crypto (albeit through the abandonment of much of its decentralization and cypherpunk philosophy). However, the broader market structure rules sought by crypto companies remain unfinished.

There have been a variety of reasons behind the lack of movement of the CLARITY Act in the Senate. Coinbase CEO Brian Armstrong withdrew his company’s support in January after reviewing an early Senate draft. “We’d rather have no bill than a bad bill,” Armstrong said at the time.

The fight soon expanded into a lobbying battle between crypto companies and traditional banks over stablecoin yield. The GENIUS Act bars stablecoin issuers from paying interest directly to holders, but left room for questions about whether affiliated companies could offer yield. Banking groups have pushed for those arrangements to be closed off in CLARITY, while Coinbase and other crypto companies have argued that banks are attempting to suppress a competing financial product. Armstrong accused bank lobbyists of trying to “ban their competition.”

Then came the ethics fight. Senate negotiators have considered restrictions on crypto activity by the president and other senior government officials, an issue that has become particularly difficult given the Trump family’s reported $1.4 billion crypto windfall and the controversy surrounding Trump-linked ventures such as World Liberty Financial. Some legal experts are alarmed the U.S. Securities and Exchange Commission hasn’t already opened an investigation into some of the Trump family’s crypto projects.

The Industry Is Running Out of Calendar

Crypto industry watchers are not treating the House schedule change as a minor inconvenience. Galaxy Digital research chief Alex Thorn posted on X that the shortened schedule makes it “extremely unlikely” that CLARITY can pass before the midterms. Punchbowl News reporter Brendan Pedersen was similarly blunt, writing that the development was “potentially very bad news for the crypto industry” because the House could be gone by September 17, leaving CLARITY potentially stuck until the lame-duck session, when “a chamber or two” could change control.

https://x.com/intangiblecoins/status/2095571795797545091

The prediction markets have already captured how dramatically sentiment has changed. Polymarket currently gives CLARITY an 18% chance of being signed into law this year. Earlier this year, the market briefly put those odds as high as 90% in February. Kalshi also climbed to roughly 80% during the optimism earlier in the year before the outlook deteriorated.

There is also a broader political problem for the administration, as a CoinDesk survey of 1,000 registered voters conducted by Public Opinion Strategies found in May that 62% did not trust the Trump administration to handle crypto regulation.

With the midterm elections potentially altering the balance of power in Washington, the stakes for the crypto industry extend beyond simply getting CLARITY passed this year. Galaxy Research warned in June that a shift in control of either chamber could bring “new committee chairs, new floor priorities, and potentially a very different posture toward crypto legislation.” The firm said that such a change “substantially reduces the likelihood” of CLARITY advancing in its current form after November.

Crypto Has Plenty of Political Capital

Of course, the industry is hardly sitting on the sidelines.

Crypto companies and affiliated political groups had already poured $189 million into the 2026 midterm elections by July. Political action committee Fairshake and its allies spent heavily to defeat Rep. Al Green in a Democratic primary, later describing the result as evidence that opposition to crypto can carry electoral consequences.

The National Sheriffs’ Association also altered its stance to the CLARITY Act on Friday and adopted a neutral position, stating, “The most appropriate course is to step back and allow the legislative process to proceed.” Previously, the group warned that the bill could create broad exemptions from anti-money-laundering requirements for mixers, tumblers and DeFi platforms.

The SEC has also begun implementing its own crypto framework under Chairman Paul Atkins. Just last month, it proposed rule changes called “Regulation Crypto Assets,” including new exemptions that would allow certain crypto offerings to raise up to $5 million over four years or $75 million annually under specified conditions.

However, it should be noted that these are regulatory decisions made under existing law, not legislation passed by Congress. A future administration could change how the SEC interprets and enforces those rules.

Source: gizmodo.com