Senate Delay in CLARITY Act Creates Uncertainty

CLARITY Act: Senate delay creates uncertainty, but US crypto-asset policy remains focused on innovation

Unexpectedly, on January 14, the U.S. Senate Committee on Banking, Housing, and Urban Affairs postponed a planned markup session the next day on the Digital Asset Clarity Act (CLARITY), creating uncertainty about the next steps for this landmark legislation.

The CLARITY Act passed the U.S. House of Representatives in July 2025 with a comfortable bipartisan majority. It provides the basis for a comprehensive federal regulatory framework for cryptoasset markets by defining the scope of regulation for key activities and services, describing responsibilities for consumer protection and preventing market manipulation, and delineating the roles of the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).

The adoption of CLARITY has been a fundamental pillar of US President Donald Trump’s strategy to establish leadership in digital asset innovation. It is also the primary legislative goal of the U.S. crypto-asset industry, which has long argued that the lack of a coherent framework has hindered market growth and slowed innovation.

For supporters of the CLARITY Act, the stakes could not be higher, as its failure has been presented as an unacceptable outcome.

What happened?

The U.S. Senate has been considering CLARITY bills since it passed the House last summer, but the bill has run into procedural and political issues that are preventing it from coming to a vote in two key committees (the Senate Banking Committee and the Senate Agriculture Committee) that it must approve before a full Senate vote.

Pressure has increased on major sponsors to advance the legislation, as the law risks long-term delay or failure if it cannot advance before the November 2026 U.S. midterm elections.

The Senate Banking Committee’s review session appeared to be the best short-term opportunity to advance the law, with the Senate Agriculture Committee not expected to mark up its own draft until January 27.

Before the session, Sen. Tim Scott, chairman of the Banking Committee, delivered an optimistic message about the bill’s prospects. However, more than 100 proposed amendments proved so controversial that Senator Scott chose to postpone the vote rather than risk failure.

The most controversial amendment, supported by the US banking industry, concerned an entirely different piece of legislation. This would amend the Guiding and Establishing National Innovation for American Stablecoins (GENIUS) Act by preventing exchanges and other platforms from paying interest to customers holding stablecoins, even when the platform is not the issuer of that token.

The cryptoasset industry has strongly opposed changing the GENIUS Act now that it has become law, and Coinbase (one of the leading advocates for CLARITY adoption) has announced the withdrawal of its support while this provision remains in effect.

Other points of contention cast doubt on whether he will gain broader support. Some industry players remained uncomfortable with the provisions surrounding the definition and treatment of decentralized finance (DeFi) innovators and software, unconvinced that they were sufficiently shielded from regulatory oversight.

Senators also disagree on whether to include language addressing official conflicts of interest, including perceived conflicts related to President Trump’s family businesses in cryptoassets, or to address them separately through the Senate Ethics Committee or separate legislation.

What future for CLARITY?

Several paths remain to be taken for CLARITY:

• Short term resolution: The Senate Banking and Agriculture committees could resolve the contentious issues and advance their respective plans in late January or early February toward a possible full Senate vote, paving the way for the bill to take effect in the first half of this year.
• Extended debate: Resolving the controversy could take longer, with deadlines falling in the spring and summer, but adoption is still on track for this year.
• Incremental approach: Legislators may determine that comprehensive legislation is too complex and pursue the goals currently set forth in the law through separate, targeted pieces of legislation. This would not be optimal for the confidence of the entire market in the US regulatory framework, but would at least ensure the achievement of certain objectives.
• Post-midterm delay: The Senate may fail to advance legislation before the November 2026 midterm elections, leaving the next Congress in January 2027 to determine whether to advance a version of existing legislation or take a new approach. This scenario creates significant doubt, with outcomes ranging from passage in 2027 or 2028 to the bill disappearing altogether if policy priorities change.

Uncertainty for CLARITY, but optimism for crypto-assets in the United States

Passage of CLARITY this year would mark a major victory for the Trump administration, the crypto-asset industry and the lawmakers who championed the bill. It would also strengthen the United States’ reputation as a global leader in crypto-asset innovation, prompting other countries to accelerate their own regulatory and market development efforts.

A major delay or failure would be a real setback. Despite this, the future remains bright for the US cryptoasset space, whatever happens next.

Although CLARITY’s future is uncertain, its journey shows significant bipartisan consensus on the need for a more comprehensive and consistent U.S. regulatory approach, as well as agreement on the key features that should include. This will inform legislative, policy, and regulatory activity in the United States for years to come.

U.S. policymakers remain keen on innovation in their approach to the cryptoasset space, and major regulatory agencies can support this approach. The United States is well-positioned to lead the global race to develop stablecoins, with work to implement the GENIUS Act well underway.

Current leadership at the SEC and CFTC will continue to prioritize engagement with the industry and providing regulatory clarity through guidance. Federal banking supervisors such as the Office of the Comptroller of the Currency (OCC) remain focused on allowing banks to engage in the cryptoasset space rather than acting as a blocker.

Although these one-off activities are less sustainable than those proposed by CLARITY, the overall trajectory of U.S. cryptoasset policy has changed significantly over the past year. Even if a future presidential administration does not fully embrace cryptoassets, a complete 180-degree return to the entirely law enforcement-focused approach of years past is unlikely.

In short, while the United States may or may not achieve CLARITY, it remains well-positioned for major growth and development in the crypto-asset space.

Other developments around the world

The last fortnight has been marked by significant regulatory and policy developments globally:

• United Kingdom (January 8): Publication of details on the operation of its new “gateway” for companies wishing to carry out regulated activities in crypto-assets once the new UK regime comes into force. The FCA confirms that any firm undertaking activities in cryptoassets within its scope will need to obtain authorization under the Financial Services and Markets Act 2000 (FSMA). Existing registered crypto-asset companies will need to seek full authorization from the FSMA to continue offering the relevant services once the new regime comes into force.
• India (January 8): Authorities have issued guidelines strengthening know your customer (KYC) and onboarding requirements for crypto users. While details continue to emerge, the direction is consistent with India’s broader approach to virtual digital assets: enabling continued activity while increasing the compliance burden on intermediaries and closing gaps in user identification.
• Switzerland (January 12): The Financial Market Supervisory Authority (FINMA) has published new guidance on the risks associated with custody of “crypto assets,” explaining how it expects supervised institutions to ensure the security of their clients’ assets. FINMA notes growing client demand for trading, investment and secure storage of crypto-assets and that the regulated institutions have expanded their offerings accordingly. The guidance focuses on the specific risk profile of custody arrangements based on distributed ledger technology.
• Dubai (January 12): The Dubai Financial Services Authority’s (DFSA) crypto token regulatory framework has come into force. The framework includes a ban on the use of privacy tokens on exchanges and a more precise definition of stablecoins aligned with emerging international standards.
• Thailand (January 13): Announced plans to implement the Travel rule data sharing requirement for cryptoasset companies registered with the country’s SEC.