The CLARITY Act Delay Has Become a Compliance Crisis, Not Merely a Political Standoff

Original Author: Tonya M. Evans

Original Translation: AididiaoJP, Foresight News

Last July, Congress promised to resolve the issue of digital asset regulatory classification. One year later, the CLARITY Act remains stalled in the Senate. This delay is no longer just political news. For boards of directors, general counsels, chief compliance officers, and risk committees, it has become a real governance, risk, and compliance deadline. With rulemaking windows closing, regulatory agency vacancies widening, and enforcement actions filling the void, the core question of market structure remains unanswered—and likely will not be resolved before the August recess.

This week marks one year since Washington declared "Crypto Week." The U.S. House of Representatives passed three landmark digital asset bills in quick succession: the CLARITY Act (to clarify whether digital assets fall under SEC or CFTC jurisdiction), the GENIUS Act (establishing the first federal framework for payment stablecoins), and the Anti-CBDC Surveillance State Act (passed by the narrowest of margins, 219-217). The CLARITY Act passed 294-134 on July 17, 2025, and the GENIUS Act was signed into law the following day.

One year later, two of those promises have been delivered.

The GENIUS Act faces its first major rulemaking deadline on July 18. The anti-CBDC provision, initially blocked after failing to attach to a defense bill, ultimately found an unexpected path: a clause prohibiting the Fed from issuing a central bank digital currency before 2030 was included in the 21st Century ROAD Housing Act. Although the President refused to sign it due to a voting dispute related to the SAVE AMERICA Act, the bill had a veto-proof majority in Congress and thus became law automatically on July 10 (House 358-32, Senate 85-5).

The third promise—arguably the most consequential—remains stalled in the Senate. Externally, this delay is increasingly characterized as another example of partisan gridlock in Congress, but that's not the case. For businesses, the CLARITY Act has long transcended political narrative; it is a compliance deadline that must be addressed.

This Is Not a Single-Product Battle, But a Market-Wide Issue

The legislative path for the GENIUS Act was relatively smooth because it targeted a single product within the digital asset economy: payment stablecoins. The CLARITY Act, however, seeks to set rules for the entire market. Stablecoins are just one category of digital asset. Market structure will determine how exchanges, broker-dealers, custodians, issuers, and all institutional participants operate. The core of the bill answers a determining question: Is a given digital asset a security under the SEC’s purview or a commodity under the CFTC’s? Registration requirements, custody rules, listing decisions, and disclosure stances all flow from this classification.

Without the CLARITY Act, classification is resolved in only two ways: which regulator files suit first, and who occupies the White House. Both answers reignite the regulatory uncertainty that has plagued the industry and compliance professionals for years. No company can build a durable compliance system on jurisdictional lines that shift with each administration, and no board can rationally price regulatory risk when the identity of the regulator itself is uncertain. This uncertainty was a corporate governance issue long before it became a trading issue.

For most large enterprises, digital assets are no longer confined to treasury experiments or innovation teams. Vendor relationships, payment infrastructure, tokenized assets, custody arrangements, and counterparty exposure are increasingly interwoven with enterprise risk management—whether an institution directly touches tokens or not.

The industry's biggest regulatory question is no longer "Will Washington regulate digital assets?" but rather "Who regulates—and that decision should be made by Congress, not regulators."

The Senate Window Is Rapidly Closing

The bill has been on the Senate's legislative calendar since June 1, eligible for a full floor vote at any time, but no vote has been scheduled. Majority Leader John Thune (R-S.D.) has prioritized the National Defense Authorization Act for the week of July 13, meaning a vote on the CLARITY Act could be pushed to the weeks of July 20 or 27—the last two windows before the August recess. The House is only in session until July 23, and after reconvening in September, there will be only about three weeks of session before lawmakers pivot fully to the midterm elections.

The vote math tightened further over the weekend.

The death of South Carolina Senator Lindsey Graham (R) at age 71, and Kentucky Senator Mitch McConnell's (R) absence due to health issues, further eroded an already slim Republican majority. And the Republican caucus is far from unified.

Missouri Senator Josh Hawley and Kentucky Senator Rand Paul were the only Republicans to vote against the GENIUS Act. Paul opposes federal regulation of the industry broadly, while Hawley objected to the bill's lack of restrictions on Big Tech holding stablecoins. Galaxy Digital analyst Alex Thorn expects both to also oppose the CLARITY Act. If so, leadership would need up to nine Democratic cross-over votes to reach the 60-vote threshold.

Four Key Disputes and Two Conditional Votes

The Senate Banking Committee passed the bill 15-9 on May 14, with Arizona Democratic Senator Ruben Gallego and Maryland Democratic Senator Angela Alsobrooks joining the Republican ranks. However, both indicated their committee votes were conditional support, not a commitment for a floor vote.

The four major disputes currently blocking the bill from reaching sufficient votes are:

Ethics Concerns

On July 13, Massachusetts Senator Elizabeth Warren wrote to Thune and Minority Leader Chuck Schumer, demanding guardrails to prevent senior officials and members of Congress from profiting off the crypto industry. She cited approximately $1.4 billion in crypto-related income reported in the President's 2025 financial disclosure. The merged Banking and Agriculture Committee draft completely removed ethics provisions. New York Senator Kirsten Gillibrand stated that enforceable position limits for officials are a prerequisite for Democratic support. One compromise under discussion (mentioned by Wyoming Senator Cynthia Lummis) involves allowing state Attorneys General to sue exchanges listing tokens issued by public officials in violation of the bill. However, Republicans are unlikely to advance ethics provisions opposed by the White House.

Law Enforcement Opposition

The National District Attorneys Association has told Senate leadership that Section 604 of the bill (the Blockchain Regulatory Certainty Act) would significantly harm criminal investigations involving cryptocurrencies. This provision protects non-custodial software developers from being subject to money transmission obligations. Oregon Senator Ron Wyden responded in a July 8 letter, arguing that developers who never control customer funds should not be considered money transmitters simply because they publish software. Virginia Senator Mark Warner and Nevada Senator Catherine Cortez Masto have made law enforcement approval a condition for their support.

Stablecoin Yield Loophole

Banking trade groups argue that the bill's language creates a loophole allowing digital asset platforms to offer yield-equivalent rewards, circumventing the GENIUS Act's prohibition on stablecoin issuers paying interest. Not all stakeholders are eager to advance: the Independent Community Bankers of America has even questioned the urgency of pushing the bill forward.

Regulatory Staffing Shortages

Under the bill, the CFTC would gain jurisdiction over spot markets for digital commodities, but the agency has had only one commissioner since last December, and the SEC has two vacancies. Minnesota Senator Amy Klobuchar proposed an amendment requiring at least four confirmed CFTC commissioners before the framework could take effect. Some committee Democrats have made adequate staffing a condition for their floor vote.

This concern crosses party lines. Bipartisan leaders of the House Agriculture Committee wrote to the President in May, urging the formation of a full commission, arguing that only a fully staffed agency can create more robust rules. This is also what compliance officers should note: broad rules issued by a single commissioner are highly susceptible to legal challenges, recreating the very uncertainty the bill aims to eliminate.

The Delay Itself Is Creating Compliance Costs

If the bill fails to pass in this window, the consequences will extend far beyond the recess. Lummis warns that failing now could delay market structure legislation until 2030. In the meantime, "regulation by enforcement" will remain the default policy model. Legal expenses become structural costs rather than project expenses, product and partnership timelines lengthen due to classification uncertainty, and boards must make capital allocation decisions based on regulatory conjecture.

Other jurisdictions are not waiting. South Africa is not the world's largest capital market, but its Financial Sector Conduct Authority has already licensed over 300 crypto asset service providers (out of 512 applications) under a clear statutory framework, while the U.S. still lacks a permanent answer to the fundamental question of regulatory classification.

Two Paths for Compliance Leaders, One Common Task

Conversely, if the bill passes, clearly defined registration paths and statutory digital commodity categories will reward enterprises that have proactively mapped their risk exposures. Classification established by Congress through legislation will not be overturned by the next administration, unlike decisions made by regulators.

Regardless of the outcome, prudent posture is the same. Compliance leaders should immediately: inventory all digital asset touchpoints and their underlying classification assumptions; document the reasoning to demonstrate due diligence under either regulator; prepare two scenario memos for the board now (rather than waiting for the vote); and stress-test custody and counterparty arrangements against both frameworks.

One year ago, Washington promised clarity. Two of the three "Crypto Week" promises have become law. The last and most critical one—the one that determines how the entire market is regulated—remains unfinished. The House will hold hearings on the anniversary.

Whether the Senate delivers the final piece of the puzzle is beyond any institution's control. But whether boards, compliance leaders, and general counsels are prepared for either outcome is entirely in their own hands.