'Ethics', Not Economics, Sink the CLARITY Act in the Senate

The US Senate failed to advance the Digital Asset Market Clarity Act on September 15, with Senator Elissa Slotkin calling its ethics provisions "simply too thin" as she cast one of the no votes. The tally stood at 50 senators voting yes against 49 no, short of the 60 affirmative votes required to advance the bill.

London's trading industry is coming home!

Cloture is the procedural step that requires 60 votes to end debate on a motion and allow the Senate to take up a bill, and clearing it would not have enacted the law on its own. Failure at this stage effectively freezes the bill for now, and with Congress set to operate under split party control next year, it is unclear when lawmakers might return to market structure legislation.

The House passed the CLARITY Act in July 2025 by a 294-134 vote. The bill aims to divide oversight of digital assets between the SEC and CFTC, extend Bank Secrecy Act obligations to crypto intermediaries, and build on the stablecoin framework set out in last year's GENIUS Act.

Senator cites ethics and enforcement gaps

Senator Slotkin (D-MI), who voted no, laid out her reasoning in a statement released the same day. On ethics, she did not mince words. "The ethics provisions in this bill are simply too thin," she said. "President Trump, his children, and his Cabinet are making billions of dollars in the crypto space, in part from bilking everyday Americans out of their hard-earned money. I cannot in good conscience vote for any legislation that codifies that behavior."

She also pointed to national security gaps, saying more work is needed "to stop money laundering and shut down funding avenues for terrorists and nations like North Korea and Iran," and said agencies including the CFTC "lack the necessary oversight and staffing to implement this legislation."

Slotkin did not rule out a second attempt, noting the bill has "strong, bipartisan provisions" that could form the basis for a future try. The US should lead the world in crypto innovation, she said, "but we need to get it right."

• 18 Attorneys General Challenge CLARITY Act Ahead of Senate Vote
• US Banks Target CLARITY Act Stablecoin Rewards in Fight Over Deposit Flight
• After CLARITY: How the US Crypto Framework Stacks Up Against MiCA, MAS, and VARA

How the industry reacted

"A failed vote isn't a reprieve; it's a warning," said Mohammad Akhavannik, Managing Director of the Newton Foundation. Treasury and FinCEN already have the authority to act on compliance, he argued, and have used it before, with or without new legislation.

Stablecoin adoption and real-world use cases are "already moving faster than the legislative process," according to XREX Group Co-founder and CEO Wayne Huang. The SEC and CFTC, he added, can still deliver clarity through rulemaking, and demand for digital dollar settlement is not waiting on Congress.

Asia, for its part, is not waiting on Washington either. Vincent Chok, Founder and CEO of First Digital, pointed to Hong Kong's Stablecoins Ordinance and Singapore's frameworks as proof markets can move without US legislation, though he warned a longer American delay risks widening the gap with jurisdictions that have already finished their rulebooks.

A cloture vote can always be brought again, noted Orest Gavryliak, Chief Legal Officer at 1inch, who called the outcome "a delay, not a verdict." Nothing changes operationally for the platform, he said, since its non-custodial model runs under the same risk posture regardless of the bill's status.

The bigger cost, according to D3 Co-Founder Michael Ho, is the reset a failure forces. "A new Congress will have to start over on what took years to draft," he said, adding that domain names alone sit atop a roughly $360 billion asset class with no financial rules attached.

US stablecoin policy is a separate matter entirely, argued Samson Leo, Co-founder and Chief Legal Officer of StraitsX. It was already settled by the GENIUS Act, he said, and remains in implementation regardless of Tuesday's result.

"This outcome leaves important questions around US digital-asset market structure and regulatory jurisdiction unresolved," Leo said. "It is worth being precise about what this does and does not affect. US stablecoin policy was settled by the GENIUS Act in 2025 and is now in implementation, including Treasury's consultation on the rules for foreign issuers. That work continues regardless of today."

November may decide the bill's fate. That was the read from Adam Morgan McCarthy, Lead Researcher at LO:TECH, who said the CLARITY Act "could be dead within two months" depending on how the midterms land, though the US remains the most competitive digital asset market regardless.

"What doesn't change is where the market already is. The US remains the most competitive digital asset market, and USD stablecoins are still the only stablecoin market that matters."