Crypto Industry’s CLARITY Act Faces Major Setback

The crypto industry’s long-delayed, highly anticipated CLARITY Act just ran into another problem. House Republican leadership has canceled the chamber’s planned voting weeks of September 21st and 28th, meaning lawmakers will return on September 14 for just four days before leaving Washington until after the midterm elections. With the Senate scheduled to begin work on its version of the bill on September 15, the chances of CLARITY reaching President Donald Trump’s desk before the midterms have become extremely slim.

cnx.cmd.push(function()cnx("playerId":"92b7b46b-43ed-4e0e-b21b-2c999302d9d7","settings":"advertising":"macros":"AD_UNIT":"/23178111854/od.gizmodo.com/article","CHILD_UNIT":"article","POST_ID":"2000807516","POST_TYPE":"post","CHANNEL":"tech","SECTION":"cryptocurrencies","SUBSECTION":"","CATEGORIES":"cryptocurrencies","TAGS":"clarity-act,coinbase,congress,crypto,sec,trump","NOP":"0","timeBeforeFirstAd":0).render("cnx-player-main"));

The House’s move came from Republican leadership after lawmakers passed a stopgap spending bill that reduced the immediate need to keep members in Washington. Majority Whip Tom Emmer’s office notified Republicans that the final two September voting weeks were being removed from the calendar. Speaker Mike Johnson said members were “jostling a lot of different priorities right now,” while Rep. Morgan Griffith said it made little sense to keep passing bills that were then “languishing in the sauna of the Senate.”

That leaves the Senate with a particularly awkward deadline. Senators are scheduled to vote on a procedural motion to advance CLARITY on September 15. Even if cloture succeeds, the Senate would still need to complete consideration of the bill and pass it. Because the Senate is working from a version that differs from the legislation previously approved by the House, the two chambers would also have to resolve those differences before the bill could reach President Trump.

Trump Made Crypto a Priority. Congress Has Had a Harder Time

Crypto has been a major focus of the Trump administration. The president previously signed an executive order establishing a Strategic Bitcoin Reserve and a U.S. Digital Asset Stockpile, directing the government to retain certain bitcoin acquired through forfeiture and allowing Treasury and Commerce to explore budget-neutral ways of acquiring additional bitcoin. An earlier executive order also created a Presidential Working Group on Digital Asset Markets and instructed it to develop a federal regulatory framework for digital assets.

Congress did manage to pass the GENIUS Act last year, establishing a federal regulatory framework for stablecoins, which have become a key development in the greater adoption of crypto (albeit through the abandonment of much of its decentralization and cypherpunk philosophy). However, the broader market structure rules sought by crypto companies remain unfinished.

There have been a variety of reasons behind the lack of movement of the CLARITY Act in the Senate. Coinbase CEO Brian Armstrong withdrew his company’s support in January after reviewing an early Senate draft. “We’d rather have no bill than a bad bill,” Armstrong said at the time.

The fight soon expanded into a lobbying battle between crypto companies and traditional banks over stablecoin yield. The GENIUS Act bars stablecoin issuers from paying interest directly to holders, but left room for questions about whether affiliated companies could offer yield. Banking groups have pushed for those arrangements to be closed off in CLARITY, while Coinbase and other crypto companies have argued that banks are attempting to suppress a competing financial product. Armstrong accused bank lobbyists of trying to “ban their competition.”

Then came the ethics fight. Senate negotiators have considered restrictions on crypto activity by the president and other senior government officials, an issue that has become particularly difficult given the Trump family’s reported $1.4 billion crypto windfall and the controversy surrounding Trump-linked ventures such as World Liberty Financial. Some legal experts are alarmed the U.S. Securities and Exchange Commission hasn’t already opened an investigation into some of the Trump family’s crypto projects.

The Industry Is Running Out of Calendar

Crypto industry watchers are not treating the House schedule change as a minor inconvenience. Galaxy Digital research chief Alex Thorn posted on X that the shortened schedule makes it “extremely unlikely” that CLARITY can pass before the midterms. Punchbowl News reporter Brendan Pedersen was similarly blunt, writing that the development was “potentially very bad news for the crypto industry” because the House could be gone by September 17, leaving CLARITY potentially stuck until the lame-duck session, when “a chamber or two” could change control.