Senate Rejects CLARITY Act, Agency Action Now Drives Crypto Regulation

The Senate's attempt to pass the Digital Asset Market Clarity Act (CLARITY) has failed, falling short of the required 60 votes on September 15. The bill aimed to clarify oversight of digital assets by splitting it between the SEC and CFTC.

However, the core issue was not the division of oversight but rather ethics language governing officials' crypto holdings. Democrats argued that the draft did not effectively cover the president and his family, while Republicans claimed that over 100 revisions had been made at Democrats' request.

The defeat of CLARITY means that agency action will now fill the gap, with the SEC and CFTC expected to continue moving through exemptions, no-action relief, and rulemaking. This process is faster than legislation but can be reversed by a new administration.