Updated September 15, 2026 at 4:05 PM CDT
It was meant to be a game changer for the cryptocurrency industry. Instead, a key piece of legislation championed by both crypto executives and President Trump suffered a stinging defeat in the U.S. Senate — and now faces steep hurdles to become law.
The Clarity Act — officially called the Digital Asset Market Clarity Act — has been at the top of the crypto sector's wish list for years. But on Tuesday, the bill failed to clear a key procedural hurdle following entrenched Democratic opposition.
The massive bill — which stretches over 600 pages — would have established the first regulations for the crypto sector in U.S. history.
But opponents saw it as the industry's attempt to encode into law a set of rules they saw as far too lenient on the industry, without enough safeguards.
A version of the bill already passed the House last year, but it has faced a long and torturous road in the Senate as opponents have fought tooth and nail. Now, it faces an uncertain future, as the crypto industry and its backers in the Senate must decide whether to try again at a later date.
Here are 5 key things to know about the Clarity Act — and why opponents are fighting hard to prevent it from ever being passed.
What's in the bill?
Just like with most things dealing with crypto, the details are complicated and a bit geeky. But the measure effectively would have established a clear legislative framework for the crypto sector for the first time in U.S. history.
That would have marked a sea change from today, when crypto regulation can change depending on who controls the White House. Under President Biden, for example, the Securities and Exchange Commission took an aggressive approach toward policing the crypto sector. But that changed radically under Trump, with the agency now led by Paul Atkins, a former adviser to the industry.
"Tens of millions of Americans are investing in products that don't have clear regulatory oversight," said Ryan VanGrack, vice chair of the crypto firm Coinbase, before the vote. "That's an abomination."
"Whether you love crypto or you hate crypto, you should want it regulated," he added. "And this is the best opportunity we have ever had to do just that."
The crypto sector has also grown beyond Bitcoin to include all kinds of cryptocurrencies — such as meme coins. Meanwhile, the technology underpinning Bitcoin and some other cryptocurrencies are also starting to be adopted by the broader financial sector.
The Clarity Act would have formally split oversight of the crypto sector between the SEC and the Commodity Futures Trading Commission. But — controversially— it would have given the CFTC, a far smaller regulator, the majority of control.
Critics say handing the CFTC the bulk of the reins was the crypto sector's way to avoid heavy regulatory scrutiny. Crypto industry executives denied that's the case, and Trump administration regulators have defended their oversight of the industry.
What was at stake in Tuesday's vote?
It was effectively a vote to decide if the bill can move forward. It needed 60 "yes" votes to clear that hurdle. Only 49 senators voted "yes" — far below the threshold. Meanwhile, 50 senators voted "no," including all Democrats and four Republicans: Sen. Susan Collins of Maine, Josh Hawley of Missouri, Jerry Moran of Kansas and Thom Tillis of North Carolina. Tillis, however, added a motion so that the bill can be reconsidered and brought up again for a vote.
Even if the bill had survived the procedural vote on Tuesday, it was never clear that it had enough supporters in the Senate to pass. And because senators have changed the bill since it passed the House last year, both chambers would still have had to agree on a final version.
The crypto sector had been hoping to pass the Clarity Act much sooner — and has amassed tens of millions of dollars to spend on the upcoming elections. But money hasn't been enough to erase the disagreements that have dogged the bill for months.
Why are Democrats so opposed?
Though not all Democrats oppose the bill, for many a key sticking point has been — and still is — an ethics clause intended to prevent presidents and other elected officials from profiting from the crypto industry while in office. Democrats, including Massachusetts Sen. Elizabeth Warren, have argued the clause doesn't do enough to prevent conflicts of interest.
Notably, the Department of Justice would have been tasked with enforcing the ethics clause, which Democrats strongly objected to since they don't believe the agency would provide a meaningful check on a sitting president. The DOJ is currently led by Todd Blanche, who used to be Trump's attorney.
Those concerns intensified after President Trump disclosed he and his family had earned $1.4 billion last year from his crypto ventures — an unprecedented sum for a sitting president.
Before Tuesday's vote. Republicans tried to break the impasse. Over the weekend, they unveiled new language in the bill to prevent federally elected officials and their spouses from issuing their own cryptocurrencies. That would have effectively prevented Trump from continuing $TRUMP, a meme coin he launched early last year — a point Trump agreed to abide by.
Officials would also have had to divest "significant" financial stakes in the crypto sector, a provision that could affect some of Trump's crypto business interests — though critics said the language was loose enough to allow the president to avoid it altogether.
The new language would also have given state attorneys general more ability to bring lawsuits if they suspected a breach of ethics rules.
Are others opposing the Clarity Act?
Yes. Many people in the banking sector — especially community bank leaders — were against it.
One of the main disputes involved a segment of the crypto market called stablecoins. The bill would have allowed these companies to pay interest to their customers.
Banks, though, argued those incentives would have allowed crypto companies to compete for customers' money without being subject to the same regulations as traditional banks.
Crypto companies have disputed that characterization and have argued that these incentives are similar to what many credit card companies offer their customers, such as cash back or points.
Community bankers have been especially vocal. They have said allowing crypto companies to offer these types of incentives would have posed a direct threat to their business and led them to lose customers.
Rebeca Romero Rainey, president and CEO of the Independent Community Bankers of America, said that keeping their customers' money with local banks is critical because it allows them to provide small business and agricultural loans to members of their communities.
"If community banks aren't there, and those local deposits aren't there to fund it, who's going to fund those small businesses and ranchers and farmers?" she said. "I don't think it's going to be the crypto industry."
So what now?
The bill is not dead — at least not yet.
The vote has been a priority for Trump, who has strongly supported the crypto industry. But the crypto industry will likely face a tough time trying to pass it this year, with the November midterms quickly approaching.
It's also hard to say how the Senate and Congress more broadly will change after the midterms. A Democratic takeover of the Senate or the House would make it even more difficult for the bill to pass, leaving the fate of the Clarity Act up in the air.
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