CLARITY fails to pass Senate, what happens next?

• The CLARITY Act failed to advance after a 49-50 Senate vote, leaving the market-structure legislation stalled ahead of midterm elections.
• The SEC and CFTC are preparing to pursue crypto market rules using existing regulatory authority.
• Industry leaders also expressed their disappointment over the Senate setback.

The US Senate on Tuesday blocked further consideration of the Digital Asset Market Clarity Act, with a procedural vote falling short of the 60 required YEA. The motion to advance the bill failed 49-50, with all 49 supporting votes coming from Republicans. The setback leaves the market-structure bill stalled as Congress moves closer to its midterm election recess.

SEC and CFTC prepare to act without legislation

With comprehensive market-structure legislation unable to move forward in the Senate, attention is now turning to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Both agencies have indicated that they are prepared to pursue changes to the regulatory framework using their existing authority.

SEC Chair Paul Atkins voiced support for the CLARITY Act during a speech at the Solana Policy Institute on Monday but said the agency's crypto agenda would continue “with or without” congressional legislation.

"But let me be equally clear: with or without that legislation, this Administration will deliver for American investors and technological innovators — which is immensely important to our markets and to those who participate in them," he said.

The CFTC is also preparing for the possibility that Congress does not deliver market-structure legislation. In August, CFTC Chair Michael Selig directed agency staff to prepare potential rules for crypto asset markets if congressional negotiations failed to produce legislation.

Potential measures could include designations for certain crypto asset markets that permit leveraged or margin trading under CFTC oversight, as well as regulatory pathways for decentralized protocols seeking to operate within the US framework.

Crypto industry reacts to Senate setback

The Senate vote also drew disappointment from several crypto industry executives, although some argued that regulatory efforts would continue regardless of the legislative outcome.

Coinbase CEO Brian Armstrong described the result as disappointing but said the industry could not rely solely on Congress to deliver regulatory clarity.

“The SEC and CFTC have the tools they need to create clear rules under existing authority, and I expect they will begin working on this in earnest. So clarity is coming to crypto regardless,” he wrote in an X post.

Armstrong also argued that crypto “can’t be uninvented” and pointed to the GENIUS Act as an existing framework for stablecoins.

Ripple CEO Brad Garlinghouse similarly described the outcome as a setback that “stings,” citing the industry's efforts to advance the legislation.

“Ultimately, consumers and US competitiveness got left behind,” Garlinghouse shared on X.

He nevertheless expressed optimism about continued regulatory activity under Atkins and Selig, noting that the SEC and CFTC “will continue to work hard to issue rules to fill the legislative gap.”

Likewise, Crypto.com co-founder and CEO Kris Marszalek argued that the procedural defeat would not reverse broader industry developments.

“A procedural vote cannot undo the plumbing of the financial system. This battle was lost, but the War on Crypto already ended,” he wrote on X.

What happens next for the CLARITY Act?

The immediate path toward passage has become more uncertain following Tuesday's vote, particularly as lawmakers approach the November midterm elections.

Meanwhile, the SEC and CFTC are positioned to play a larger role in shaping the regulatory environment for digital assets. Their actions could provide some regulatory direction while Congress remains divided over comprehensive market-structure legislation.