Senate Fails to Advance Clarity Act Amid Disagreements Over Cryptocurrency Regulation

The U.S. Senate's attempt to regulate cryptocurrency has hit a roadblock as the Clarity Act, which aimed to set ground rules for regulating the digital currency market, failed a major procedural vote on Tuesday.

The bill, which had already passed in the House of Representatives, would have established how crypto would be taxed, overseen by which federal agency, and how banks would handle it. But lawmakers were unable to reach the 60 votes needed to bring the act to the floor for a vote.

Crypto industry leaders had hailed the legislation as a game-changer in the emerging market, but critics argued that it could enrich President Donald Trump, who has publicly disclosed purchases of cryptocurrency.

As it stands now, crypto is regulated through a patchwork of state laws and White House executive orders, which are subject to change depending on who is in office. A Pew Research Center report from June showed that one in five Americans has used cryptocurrency.

Ramnath Chellappa, a professor at Emory University's Goizueta Business School, noted that regulation had struggled to keep up with the growing use of crypto: 'The discussion or the question about the legality of crypto, I think we are well past that. People are using it, and not only individuals, but we have banks and we have ETFs [exchange-traded funds] and everybody investing in it.'

The failure of the Clarity Act is a setback for lawmakers seeking to provide regulatory certainty for the industry, which is growing rapidly despite the lack of clear rules.