An Imperfect CLARITY Act Beats More Delay, Say Crypto Execs

Crypto executives are urging lawmakers to compromise and pass the CLARITY Act when Congress returns in September, warning another delay could squander the bill’s best remaining chance this year.

Five industry executives told CoinMarketCap that disputes over stablecoin rewards, ethics rules, and other provisions should not derail the broader framework. An imperfect but durable law would be preferable to reversible agency guidance, they said. Further delay could slow institutional investment and shift infrastructure to foreign markets with established rules.

The bill faces its first Senate floor test on Sept. 15, when lawmakers will vote on whether to begin formal consideration. Failure to secure the required 60 votes could effectively end the CLARITY Act’s chances of becoming law this year.

Y Combinator is among industry firms backing CLARITY

“This current delay is significant because lawmakers are running out of time before the November midterms, when passing major legislation becomes considerably harder,” Maylea Ma, deputy general counsel at 1inch, told CoinMarketCap.

“I firmly believe that an imperfect framework is better than the current scenario of favorable-but-reversible agency guidance,” Ma added.

Agency Rules May Not Last

The CLARITY Act would define when digital assets are securities or commodities, establish registration rules for exchanges, and give the Commodity Futures Trading Commission (CFTC) authority over regulated crypto spot markets.
Although the Securities and Exchange Commission (SEC) and CFTC are alreadymovingwithout Congress, their actions could be reversed by a future administration.

Ma said 1inch is focused on provisions protecting software developers, self-custody, and non-custodial platforms.

“The priority isn’t a perfect bill, but instead a durable framework that preserves meaningful protections for DeFi developers,” she said.

Stablecoin Rewards Divide Banks and Crypto

The draft Senate bill prohibits stablecoin issuers from paying interest-like rewards on passive stablecoin holdings.
Banks say those rewards could mimic interest-bearing deposits and pull funds from community lenders. Crypto firms say the proposed restrictions would needlessly stymie competition and consumer choice.

Banks are opposed to rules permitting stablecoin issuers to pay interest-like rewards

OpenPayd CEO Iana Dimitrova said that even without the act’s desired protections, stablecoins are playing a growing role in transaction settlement and cross-border payments.

“Stablecoins are increasingly being used to move money, not simply hold value,” she told CoinMarketCap.

The GENIUS Act laid out federal rules for stablecoin issuance, reserves, and redemption, but left rewards offered by exchanges and other intermediaries unresolved.

Vincent Chok, CEO and co-founder of FDUSD issuer First Digital, said consistent rules would bolster institutional trust.

“The framework should also recognize that stablecoin markets are already global,” he said.

DeFi Protections Face AML Pushback

The CLARITY Act is particularly important for US-based decentralized finance (DeFi) developers.

As drafted, the bill would exempt non-custodial software, including DeFi protocols, from rules designed for institutional financial intermediaries.

Law enforcement groupswarned that the draft bill’s provisions could interfere with investigations into sanctions evasion and other crimes.

Law enforcement groups say rule exemptions for DeFi protocols could make crimes harder to track

The current draft of the CLARITY Act still subjects digital commodity exchanges, brokers, and dealers to Bank Secrecy Act requirements. It also regulates DeFi platforms that retain enough control to resemble financial intermediaries.

Ma said the draft already includes the key protections sought by DeFi developers. However, those provisions could change as supporters seek the 60 votes needed for passage.

Institutions Keep Building

Even without the bill, institutional crypto adoption is accelerating, with dozens of institutions rolling out crypto exchange-traded funds (ETFs), tokenized funds, and stablecoin infrastructure.

Public backers of the CLARITY Act include BlackRock, Fidelity, Franklin Templeton, Goldman Sachs and SoFi.

Sam MacPherson, CEO of DeFi capital allocator Spark, said another delay may slow certain investment decisions, but it would not reverse the trend toward broader crypto adoption.

“Institutions are already investing in digital-asset and stablecoin infrastructure,” he told CoinMarketCap. “CLARITY would accelerate that process rather than start it.”

Michael Ho, co-founder of D3, the team behind Doma Protocol, said clear oversight would help bring more capital on-chain.

“Oversight is not the cost of participating in this market,” he said. “It is the condition for the market getting any bigger.”

Galaxy’s Thorn has lowered his odds of CLARITY passing to 10%

President Donald Trumpcalled on Congress to pass a “fair version” of CLARITY during an Aug. 19 White House meeting with crypto and financial executives.
Galaxy Research head Alex Thorn hascut his estimate of the bill becoming law in 2026 to 10%. Missing September would not formally kill the bill, but failure to pass it before the current Congress ends would force lawmakers to start over in 2027.

“Global finance won’t pause for politics and it’s important this debate doesn’t lose urgency,” Dimitrova said.

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Source: coinmarketcap.com