CLARITY Act stalls as Trump stays silent on ethics deal
The CLARITY Act is still stuck in the Senate, with ethics talks unresolved, procedural roadblocks piling up, and policy disputes slowing the bill’s path to a vote.
- White House has not answered the Tillis-Gallego ethics counterproposal
- Senate leaders have not filed cloture
- Polymarket odds have dropped to 27%
- Bernstein warns of a short-term crypto sell-off if momentum dies
- The real prize is still U.S. market-structure clarity
For an industry that keeps asking Washington for rules, this is a familiar mess. Everyone says they want clarity, then everybody starts tap-dancing around the hard part. The result is more delay, more confusion, and more room for regulators to keep freelancing.
Crypto journalist Eleanor Terrett reported Monday that the White House had yet to respond to the bipartisan Tillis-Gallego ethics counterproposal. That proposal is meant to address concerns around crypto activity involving federal officials. According to the reported compromise, state attorneys general would have a role in enforcing the restrictions, and state officials could sue the Department of Justice if the DOJ failed to enforce the ethics rules.
That last point helps explain why Democrats balked at the earlier version accepted by the White House, which left enforcement solely with the DOJ. If the only enforcer is the same institution that may be slow-walking the issue, the whole “ethics guardrail” starts to look a lot like theater with a filing cabinet.
But the White House response is only one part of the stall. Senate procedure matters just as much, and Senate Majority Leader John Thune has not filed cloture on the CLARITY Act. Cloture is the Senate move that ends debate and forces the chamber toward a vote. Without it, a bill can sit there indefinitely, waiting for somebody to stop talking.
And because the bill would likely face a filibuster, it would need 60 votes to advance. That is where crypto legislation usually runs into the wall, not because lawmakers have no opinions, but because they have too many of them.
The Senate’s Monday schedule included a cloture vote on the motion to proceed to H.R. 6500, a continuing-resolution vehicle, but no scheduled action on H.R. 3633, the Digital Asset Market Clarity Act. That kind of scheduling tells you where floor priorities sit when the calendar gets tight. Recess is approaching, and time in the Senate has a nasty habit of evaporating.
The bill itself is not a minor tweak. The CLARITY Act is meant to create a federal market-structure framework for digital assets and spell out how the SEC and CFTC divide oversight. Arnold & Porter says the legislation would classify crypto assets into three buckets: digital commodities (tokens treated more like commodities than securities), investment contract assets (tokens sold in a way that may initially fall under securities rules), and permitted payment stablecoins (stablecoins allowed for payments under the framework).
That split is the whole fight in one sentence. Crypto firms want to know who regulates what. Regulators want to preserve their turf. Lawmakers want to sound pro-innovation without looking like they handed the keys to the whole market to a bunch of code and vibes. A classic Washington dilemma.
According to Arnold & Porter, the bill would also clarify that the CFTC gets exclusive anti-fraud and anti-manipulation authority over digital commodities, while the SEC keeps authority over issuers and issuances of investment contract assets. That matters because U.S. crypto policy has spent years buried in overlapping claims, lawsuits, enforcement actions, and agency turf wars.
The DeFi side of the bill is just as important. DeFi, short for decentralized finance, refers to blockchain-based financial applications that operate without traditional intermediaries. Arnold & Porter says the CLARITY Act directs the SEC to exempt certain DeFi activities and creates registration rules for intermediaries. It also includes a process for a blockchain system to be certified as “mature, ” which would help end securities-style treatment for some distributions and secondary-market activity.
That “mature” status is one of the more consequential ideas in the bill. In practical terms, it could give projects a path from early token fundraising into more open trading without being stuck forever under securities-law suspicion. Supporters will call that a sane way to recognize that networks evolve. Critics will say it gives projects too easy a runway and leaves investors to catch the fallout later.
The bill is also drawing pushback from prosecutors and law enforcement groups over provisions that they say protect some non-custodial blockchain developers from Bank Secrecy Act registration requirements. Non-custodial developers do not take custody of user funds, which is exactly why this fight is so messy: should open-source software builders be treated like financial intermediaries when they never hold the money?
Treasury Secretary Scott Bessent rejected that interpretation, arguing that non-custodial developers have never been subject to those obligations and that the bill would codify existing Treasury policy. That is Treasury’s position, not a settled legal fact. And it is a reminder that “clarity” in crypto often means someone is very sure the rule already exists, while someone else is equally sure it absolutely does not.
Market expectations have also cooled sharply. Polymarket traders now assign the CLARITY Act a 27% chance of becoming law before the end of 2026, down from above 80% in February. Prediction markets are useful for gauging sentiment, but they are not crystal balls. They often move with momentum, headlines, and hope, which is a polite way of saying they can get ahead of themselves just like everyone else in crypto.
Still, a drop that steep says the room has lost confidence. The reasons are obvious enough: Senate delays, unresolved ethics questions, and policy disagreements over DeFi and market structure. Nobody wants to admit the bill is bogged down, but the trading screen has no such shame.
Bernstein analysts warned that if the Senate fails to advance the bill, the crypto market could see a short-term “knee-jerk” sell-off. Their view is tactical rather than apocalyptic. Bernstein wrote:
“From a tactical standpoint, we expect the crypto market to bottom and start showing momentum towards late Q3 and early Q4 prior to the mid-terms, ”
That is a more grounded take than the usual moon-boy nonsense that floods crypto whenever legislation gets mentioned. Bernstein is not saying the market is finished. It is saying traders may have to wait longer for a policy catalyst, and markets tend to throw a tantrum when they do not get what they priced in.
There is also a fallback if Congress keeps dragging its feet. Bernstein expects the SEC and CFTC to come under pressure to provide more guidance through Project Crypto, including on token classifications, decentralized finance, and a possible exemption for qualifying token issuances. That could help U.S. crypto firms in the short run, but guidance is not law. It can help, and it can vanish with a change in political weather.
That is the core problem here. Agencies can interpret. Courts can arbitrate. But only Congress can write the sort of durable framework the industry keeps pretending it already has. The longer lawmakers stall, the more regulation is made by enforcement actions, legal threats, and bureaucratic improvisation instead of a statute that actually says what the rules are.
Key questions and takeaways
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Why is the CLARITY Act stalled?
The bill is caught between unresolved ethics talks, Senate procedure, and policy disagreements. The White House has not answered the Tillis-Gallego counterproposal, and Senate leaders have not yet filed cloture to move the bill toward a vote. -
What does the CLARITY Act try to do?
It would create a federal market-structure framework for digital assets and define how the SEC and CFTC split oversight. In plain English, it tries to end the current guessing game over which agency regulates which token or platform. -
Why does DeFi matter in this bill?
The legislation would touch decentralized finance platforms, including possible exemptions for some activities and registration rules for intermediaries. That could shape whether DeFi is treated like software, a financial service, or both. -
What is the Bank Secrecy Act dispute about?
Critics say the bill may protect some non-custodial blockchain developers from registration requirements tied to anti-money-laundering rules. Treasury Secretary Scott Bessent says the bill would simply codify existing Treasury policy. -
Why are market odds falling?
Polymarket now gives the bill a 27% chance of becoming law before the end of 2026, down from above 80% in February. That slide reflects slowing Senate progress and unresolved policy fights, not a single isolated snag. -
Could this hit Bitcoin and crypto prices?
Bernstein says a Senate failure to advance the bill could trigger a short-term “knee-jerk” sell-off. That would be a tactical reaction, though not necessarily a long-term judgment on Bitcoin or the broader market. -
What happens if Congress keeps stalling?
Agencies may step in with more guidance through efforts like Project Crypto. That can provide some temporary relief, but it is still weaker and less durable than a law passed by Congress.
Washington still wants the upside of crypto innovation without doing the unglamorous work of setting real boundaries. The CLARITY Act is supposed to be the boundary-setting bill. Right now it is trapped in the usual swamp of ethics drama, floor timing, and jurisdictional turf wars.
The next moves to watch are simple: whether the White House responds to the ethics compromise, and whether Senate leaders finally file cloture. Until then, the U.S. crypto sector stays in the same painful place, too important to ignore, too controversial to legislate cleanly, and too often left to the mercy of enforcement-by-discretion.
Myth vs. Fact: The CLARITY Act lays out one side of the policy argument in more polished Washington language, while the broader legislative process remains stuck in the mud.
The Senate’s own docket for the 119th Congress (2025-2026): Digital shows how much the bill’s movement depends on timing, sequencing, and whether leadership decides it is actually worth spending floor time on.
For a fuller breakdown of where the fight is headed next, CLARITY Act Sparks Senate Showdown: DeFi and Crypto digs into the clash over market structure, while CLARITY Act Faces Senate Roadblocks Over Ethics, DeFi and goes deeper on the ethics and developer-protection issues that keep tripping up momentum.
And if you want the earlier legislative backdrop, CLARITY Act Passes Senate Committee, Boosting U.S. Crypto covers the committee-stage progress that now looks a lot less impressive than it did at the time.
For the Senate’s messaging campaign, Myth vs. Fact: The CLARITY Act offers the official talking points, though the real question is whether those talking points survive contact with floor politics.
If you want to see how market traders are reacting in real time, Senate Ethics Deadlock Drags CLARITY Act Odds Under tracks the slump in odds, and it is not exactly a vote of confidence.
