10/03/2026
For a few reasons, the Digital Asset Market Clarity Act was doomed to fail from launch, but nevertheless it’s a shame that it did. It was Congress’ innumerable version of the same concept that has circulated for years: how to regulate cryptocurrencies, and who would do it. Currently, the regulation is fragmented and installed by enforcement. This model is weak from a legislative standpoint, since the market for cryptocurrencies has about $3 trillion to its name.
Had the act passed the Senate, the CFTC would have had full supervisory powers over the crypto commodity spot markets. Defining the different buckets of blockchain-native assets and who would regulate them was a core aspect of Clarity, and the most pertinent reason why it should have passed. It would have been progressive for the industry, netting out to political entanglements. However, it stalled in the Senate after having passed in the house with a massive bipartisan vote, largely because it was carried out in a piecemeal fashion; Trump complicated the negotiations, the crypto industry engaged with lawmakers scatteredly, and we’re heading into a midterm election, so time betrayed them.
The stalling of the act in the Senate was predictable yet disappointing. The crypto industry should be regulated because it’s in its infancy, just starting to move beyond hypothetical use-cases. For a “currency” that has only existed for less than 20 years, it has already been attributed to fraud, money laundering, and speculation. That track record alone should have been enough to get this bill over the line. The agencies began laying out how they view the crypto market, but a crypto market structure bill could sort out all of these issues in a much more legally tangible way. It’s no longer an outsider-only asset, BlackRock (headquartered in Manhattan) runs one of the largest spot bitcoin ETFs. The same BlackRock that owns 8% of Disney. When firms that size are in the market, so are ordinary people's retirement savings, and they deserve real rules.
The failure of the Clarity Act is a function of three main points of contention: the infancy of the industry, the existing regulatory model, and the ethical concerns of the Democrats which were unaddressed by the Republicans. Firstly, the infancy of the industry is exactly why it should be regulated, but Democrats and Republicans alike argued that locking it under a statutory framework that risks becoming outdated as the technology evolves is unwise. They have it backwards. Congress can amend a law as the technology changes, but it can't undo the damage once investors get burned in a market with no rules.
The existing regulatory model ties into the third point of contention, but suffice to say that whether the regulatory “gap” from existing laws justified legislation was undecided. However, outside of outright fraud, crypto spot markets currently exist in a sort of federal regulatory gray zone. New York has already tried to close that gap on its own. Since 2015, any crypto firm serving New Yorkers has needed a BitLicense from the state. The experiment proved crypto can be regulated, but a state-by-state approach just creates a patchwork where the rules change at the state line. So the current regulatory framework by all means needs to be amended to provide a statutory foundation for how trading and investing in these assets should be conducted.
Most importantly, and the drum Democratic senators kept beating, was grifting. Put more mildly, it was the limit to senior government officials’ personal ties to crypto (namely Trump–look no further than World Liberty Financial). In his June financial report, he disclosed a profit of $1.4B from his various crypto ventures which he only participates in “because a lot of people, you know millions of people want it” as he told “Meet the Press.” A president profiting from an industry should not get to shape its rules without limits. Democrats were right to object. But both parties could have solved this by writing conflict-of-interest limits into the bill, and neither did. The policy paid the price for the politics.
It should be no surprise to any politically informed American–or anyone who’s watched a standoff–that the White House, Senate Republicans, and Senate Democrats were unable to reach a conclusive agreement as a result of this. We’re six weeks away from a midterm election with a very divided electorate and a lot of partisan infighting. This is not optimal timing for such a radical act to be put in place–irrespective of the ethical controversy involved. So this is unfortunately for investors and taxpayers a “right thing wrong time” trope.
The September 15 vote was not against crypto regulation, it was against a statutory framework for how crypto should be regulated. Now the bill's future is in limbo, and New Yorkers have more influence over what happens next than most. Both of our senators are at the center of this fight. With the midterms six weeks away, make sure you're registered somewhere. A $3 trillion market is too big to keep regulating one lawsuit at a time.