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If you’ve been following crypto over the past few years, you’ve probably heard the term CLARITY Act pop up many times.
And while it has become one of the industry’s biggest talking points, everyone was expecting it to pass and change the US crypto industry for the good, but the bill still hasn’t crossed the finish line yet.
So, what’s taking so long? And why should anyone outside the US care?
First, what is the CLARITY Act?
Let’s refresh our minds. The Digital Asset Market CLARITY Act is the United States’ biggest attempt yet to create a clear rulebook for the crypto ecosystem. It is designed to set clarity over the crypto regulatory landscape in the country (hence the name), so that industry players can navigate it efficiently and compliantly.
The objective is also to end years of regulatory uncertainty by defining which digital assets are regulated by the Securities and Exchange Commission (SEC) and which fall under the Commodity Futures Trading Commission (CFTC).
At the same time, the legislation would introduce registration requirements, disclosure obligations and consumer protection rules for crypto companies operating in the US.
In other words, everyone would finally know which rules apply when and why, instead of trying to interpret regulations that were never written with crypto in mind.
For an industry that has spent years asking for “clear rules”, this is a pretty big deal!
Why should people in Europe and elsewhere care?
Fair question. After all, Europe already has MiCA, which gives crypto companies a unified regulatory framework across the whole European Union.
So why pay attention to what’s happening on the other side of the Atlantic?
Well, it’s not about the regulation itself, but about the impact it would have over the global crypto industry. Because the United States is still the world’s largest financial market, and many of crypto’s biggest companies, including Coinbase and Kraken for example, were founded and are still based there.
So whenever the US regulatory environment becomes clear, companies will gain confidence to build, launch products and attract investment. With the influence the US has, this would ultimately benefit the entire crypto ecosystem.
In short, if the US crypto market future is getting clearer and more promising, it will be positive for the global crypto market too.
So… why is it delayed?
Well… politics happened.
The Senate has been busy dealing with other priorities before its August 8 recess, including judicial nominations and a Russia sanctions bill, which has left little room on the legislative calendar for a lengthy debate on the CLARITY Act.
Even if lawmakers wanted to vote immediately, Senate procedures involve several mandatory steps that make rushing a controversial bill extremely difficult.
And that’s only part of the story.
Negotiations are still ongoing because lawmakers haven’t agreed on every section of the legislation. Eat, sleep, debate, repeat.
The biggest sticking points
The main issue under the spotlights is ethics.
Lawmakers continue debating how much involvement senior government officials should be allowed to have in crypto projects while holding public office.
Much of that discussion resulted from President Donald Trump’s crypto ventures and memecoin launch, prompting calls for stronger restrictions and clearer conflict-of-interest rules.
But that’s far from the only debate. Negotiators are also discussing:
- Protections for blockchain developers
- Anti-money laundering rules for DeFi
- Stablecoin reward programmes
- Enforcement powers for regulators
- Consumer protections
- Exact responsibilities of the SEC and CFTC
As you can imagine, getting everyone to agree on hundreds of pages of legislation isn’t exactly quick. Especially when we’re talking about financial topics.
Who supports the bill?
Despite those delays, support continues to grow significantly.
Some of the biggest names in finance including BlackRock, Fidelity, Franklin Templeton, Goldman Sachs and SoFi, have publicly urged Congress to pass the legislation.
Their argument is pretty straightforward: clearer regulation protects investors, encourages innovation and helps the US stay competitive in an increasingly digital financial world.
But well… the White House, crypto companies, banking groups, law enforcement organisations and lawmakers from both political parties continue negotiating the final details.
Everyone agrees that clearer rules would be beneficial. The challenge is agreeing on exactly what those rules should be.
What happens next?
Unless something changes unexpectedly, the Senate is set to return to the CLARITY Act after its August recess, likely sometime in September.
If the bill passes the Senate, it must still return to the House if any changes need approval before eventually landing on President Trump’s desk to become law.
If Congress fails to reach an agreement, the SEC has already said it’s prepared to move forward with clearer crypto rules using its existing authority (that would certainly help).
However, agency rules don’t offer the same long-term legal certainty as a law passed by Congress, and they can’t fully achieve CLARITY Act’s goal of clearly dividing responsibilities between the SEC and the CFTC.
For now, the political battle continues while the industry is still waiting for what could become one of the most important pieces of legislation in its history.
The outcome around the CLARITY Act won’t just shape crypto in the United States, but could influence the direction of the global crypto industry for years to come. Let’s keep an eye out.
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