CLARITY Act delay has become a compliance crisis, not just a political deadlock

Original author: Tonya M. Evans

Original translation: AididiaoJP, Foresight News

Congress promised last July to resolve the jurisdictional issue of digital asset regulation. A year later, the CLARITY Act remains stuck 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 the rulemaking window closing, regulatory agency vacancies expanding, and enforcement actions filling the void, the core issue of market structure remains unresolved—and likely will not be answered before the August recess.

This week last year, Washington declared "Crypto Week." The U.S. House of Representatives passed three landmark digital asset bills: the CLARITY Act (clarifying 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 narrowly 219-217). The CLARITY Act passed 294-134 on July 17, 2025, and the GENIUS Act was signed into law the next day.

A year later, two of those commitments have materialized.

The GENIUS Act faces its first major rulemaking deadline on July 18. The anti-CBDC provision, initially blocked by failing to attach to a defense bill, eventually succeeded through an unexpected path: a clause prohibiting the Federal Reserve from issuing a central bank digital currency before 2030 was incorporated into the 21st Century ROAD Housing Act. Although the president refused to sign due to voting disputes related to the SAVE AMERICA Act, the bill had a veto-proof majority in Congress, automatically becoming law on July 10 (House 358-32, Senate 85-5).

The third commitment—arguably the most impactful—remains stalled in the Senate. Externally, this delay is increasingly framed as another example of congressional partisan gridlock, but that is not the case. For businesses, the CLARITY Act has long transcended political narrative to become a compliance deadline that must be addressed.

This is not a single-product dispute, but a market-wide issue

The GENIUS Act had a relatively smoother legislative path because it targets a single product within the digital asset economy—payment stablecoins. The CLARITY Act, however, aims to set rules for the entire market. Stablecoins are just one type of digital asset; market structure will dictate how exchanges, brokers, custodians, issuers, and all institutional participants operate. The core of the bill lies in answering a decisive question: whether a specific digital asset is a security regulated by the SEC or a commodity regulated by the CFTC. Registration requirements, custody rules, listing decisions, and disclosure postures all stem from this classification.

Without the CLARITY Act, the classification issue is resolved in only two ways: which regulator files a lawsuit first, and who occupies the White House. Both outcomes reignite the regulatory uncertainty that has plagued the industry and compliance professionals in recent years. No company can build a lasting compliance system based on jurisdictional lines that shift with every administration, and no board can reasonably price regulatory risk when the regulator's very identity 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. Supplier relationships, payment infrastructure, tokenized assets, custody arrangements, and counterparty exposure are increasingly intertwined with enterprise risk management—regardless of whether the institution directly touches tokens.

The industry's biggest regulatory question is no longer "Will Washington regulate digital assets?" but "Will Congress, not an agency, decide who regulates?"

The Senate window is closing rapidly

The bill has been on the Senate's legislative calendar since June 1, available for a full floor vote, 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, with only about three weeks of session remaining after reconvening in September before members fully turn to midterm elections.

The voting landscape tightened further over the weekend.

The death of South Carolina Senator Lindsey Graham (R) (aged 71) and the absence of Kentucky Senator Mitch McConnell (R) due to health issues further weakened an already slim Republican majority. Furthermore, the Republican party 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 general federal regulation of the industry, while Hawley objects to the lack of restrictions on Big Tech holding stablecoins. Galaxy Digital analyst Alex Thorn expects both to oppose the CLARITY Act as well. If so, leadership may need up to nine Democrats to cross party lines to reach the 60-vote threshold.

Four major controversies 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 commitments for a floor vote.

The four major controversies currently blocking the bill from securing enough votes are:

Ethics Concerns

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

Law Enforcement Opposition

The National District Attorneys Association argued to Senate leadership that Section 604 of the bill (the Blockchain Regulatory Certainty Act) would severely impair criminal investigations involving cryptocurrency. This provision protects non-custodial software developers from 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 merely for publishing software. Virginia Senator Mark Warner and Nevada Senator Catherine Cortez Masto have made law enforcement endorsement a condition for their support.

Stablecoin Yield Loophole

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

Regulatory Staffing Shortages

Under the bill, the CFTC would gain jurisdiction over the digital commodity spot market, but it has only one commissioner since last December, and the SEC has two vacancies. Minnesota Senator Amy Klobuchar proposed an amendment requiring at least four CFTC commissioners to be confirmed before the framework takes effect. Some committee Democrats have made staffing a condition for a 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 something compliance officers should note: broad rules issued by a single commissioner are highly susceptible to legal challenges, potentially recreating the uncertainty the bill aims to eliminate.

The delay itself is creating compliance costs

If the bill fails to pass within this window, the consequences will extend far beyond the recess period. Lummis warns that failure now could delay market structure legislation until 2030. In the interim, "regulation by enforcement" will remain the default policy model. Legal expenses become a structural cost rather than a project expense, product and partnership timelines are extended due to classification uncertainty, and boards are forced to make capital allocation decisions based on regulatory guesswork.

Other jurisdictions are not waiting. While South Africa is not the world's largest capital market, its Financial Sector Conduct Authority has approved over 300 crypto asset service provider licenses (out of 512 total applications) under a clear statutory framework, while the US still lacks a permanent answer to the fundamental question of regulatory jurisdiction.

Two paths for compliance leaders, one common task

Conversely, if the bill passes, a clearly defined registration path and statutory digital commodity category will reward companies that have proactively mapped their risk exposures. Classification determined by Congress through legislation will not be overturned by the next administration like an agency decision.

Regardless of the outcome, the prudent posture remains the same. Compliance leaders should immediately inventory all digital asset touchpoints and the classification assumptions behind them, document the rationale to demonstrate due diligence under either regulator, prepare two-scenario memos for the board *now* (rather than after the vote), and stress-test custodial and counterparty arrangements against both frameworks.

A year ago, Washington promised clarity. Two of the three "Crypto Week" commitments 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 a hearing on its anniversary.

Whether the Senate can deliver the final piece 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.