WASHINGTON, DC — Hopes of passing new legislation this year to regulate cryptocurrency are fading as negotiations stall in the Senate on partisan lines.
What you need to know
- Negotiations on crypto regulation legislation in the Senate have stalled on partisan lines.
- The legislation would define how digital assets are classified and which agencies will regulate them.
- Senators meet with crypto industry business leaders this week
Since President Donald Trump signed legislation regulating stablecoins over the summer, momentum has been building to pass legislation regulating all cryptocurrencies. The fact that senators are working on the bill during a government shutdown underscores the urgency of regulating an industry that has exploded in size in recent years. The global crypto market value increased from $192 billion in 2019 to $4 trillion in 2025, an increase of 1,983%.
The CLARITY Act would define how digital assets are classified and which agencies will regulate them. It would do this by reclassifying many types of cryptocurrencies as commodities rather than securities. The rules applicable to commodities, such as oil, wheat or electricity, are generally more flexible than those applicable to financial securities such as stocks or bonds.
The bill would also determine whether digital assets fall under the jurisdiction of the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
Passed in the House in July, the bill remains blocked in the Senate.
Democrats want the legislation to protect consumers from fraud, prevent money laundering and prevent officials like President Trump from owning crypto-related companies.
“Crypto lobbyists are roaming Capitol Hill, and what are they looking for? Senate Banking Committee Ranking Member Elizabeth Warren, D-Mass., said during an Oct. 1 Senate Finance Committee hearing. “To make it more difficult to track what happens in crypto transactions if they are used for illegal purposes.”
Republicans, meanwhile, want to ensure the legislation doesn’t slow innovation in a rapidly growing sector.
“The industry is pretty united. They want regulation, which is fantastic. The industry is crying out for certainty and clarity to say, ‘Hey, what are the rules of the road?'” said Sen. Bernie Moreno, Republican of Ohio, who serves on the Senate Banking Committee.
Moreno, a longtime champion of the crypto industry, blamed Democrats for the delay in moving the legislation forward.
The September 30 date for the bill was pushed back because a group of 12 pro-crypto Democrats involved in the negotiations proposed a counterproposal that included more restrictive regulations than those proposed by Republicans, particularly for decentralized finance (DeFi), a peer-to-peer system that removes centralized institutions from crypto transactions.
“Frankly, I think that’s the temperature of what’s happening here in the Senate,” Moreno said. “(Democrats) just don’t want to do anything because they’re afraid someone on social media will say, ‘Why are you cooperating with Republicans?'”
A spokesperson for Senate Banking Committee Chairman Tim Scott, R-Fl., wrote in a statement:
“In their quest for a bipartisan markup of market structure, Chairman Scott and Republicans on the Banking Committee delayed the September 30 markup to give fellow Democrats more time to come to the table and engage substantively on the legislative text. Since June, the committee has issued principles, held a hearing, and released two discussion drafts, each reflecting feedback from members, industry, and stakeholders. regulators. Despite repeated requests for changes and red lines from Democrats, they have yet to provide an official document. comments or accept a markup date.
The President remains optimistic that Democrats will return to the negotiating table, engage in good faith to finalize the text, and set a markup date as soon as possible to provide the regulatory clarity the U.S. digital assets industry needs to thrive.
The crypto industry spent $40 million in the 2024 Ohio Senate elections to help unseat former Sen. Sherrod Brown, who chaired the banking committee and took a strong stance on crypto regulation.
The longer the legislation remains blocked, the more the industry risks spending heavily in next year’s Senate race, in which Brown is running again, this time to unseat Sen. Jon Husted, R-Ohio.
