49:50 votes to veto the CLARITY Act, US crypto regulation returns to SEC and CFTC

According to Woofun AI, on September 15, 2026, the US Senate failed to pass a procedural motion to advance the Digital Asset Market Clarity Act (CLARITY Act) with a slight disadvantage of 49 votes in favor and 50 against.

This result marks a substantial standstill of the bill at the congressional level, and the return of regulatory dominance to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Although no final veto was made on the substantive content of the bill, there was a lack of votes needed to end the debate, making it impossible for the text to enter the revision and final voting stage, and the time window for the current National Assembly to deal with this issue has been significantly compressed.

The results of the 49-50 vote profoundly revealed the fragility of the legislative process and the breakdown of cross-party alliances. Under US Senate rules, the majority party must first obtain sufficient votes to end the debate before the bill can enter into substantive review, amendment, and final voting. The CLARITY Act was suspended because the affirmative vote did not reach the threshold. It covers core topics such as SEC and CFTC authority allocation, trading platform registration, customer asset isolation, information disclosure, and decentralized finance, awaiting opportunities to be renegotiated, replaced, or attached to other laws. The deeper crisis is that as the midterm elections approach, the ability of lawmakers to bear the cost of compromise on sensitive issues such as conflict of interest, national security, and financial stability has declined drastically. Earlier, the committee leadership emphasized that the text stemmed from long-term bipartisan negotiations and absorbed investor protection content proposed by some Democrats, but in the end, the Democratic Party as a whole opposed it during the vote, and four other Republican senators defected. This shows that simply relying on Republican votes is no longer enough to push for market structure legislation; any attempt to preserve the core structure will have to face huge uncertainty about restructuring political alliances.

The core mechanism of the CLARITY Act aims to restructure asset classification and supervisory authority in an attempt to resolve the long-term difficulties caused by the division of labor between securities law and commodity law. Under the current system, the SEC is responsible for issuing securities, securities trading platforms, and intermediaries, and although the CFTC has mature authority over commodity derivatives, it has limited direct supervision of the digital commodity spot market. Assets such as Bitcoin are often viewed as commodities, but a large number of tokens may involve “investment contracts” during the issuance phase. The bill aims to separate the legal relationship between the asset itself and the time of issuance and sale through the concepts of “digital goods” and “investment contract assets”. Specifically, when the development team sells tokens to raise capital, it may constitute a securities transaction, but when the network reaches a certain decentralized or functional state and the issuer completes disclosure, some secondary market activities can be transferred to a digital product framework dominated by the CFTC.

If this design is implemented, the platform can determine the registration authority in advance, and the project can arrange compliance paths around network maturity and related party holdings. The CFTC can also require the trading platform to establish customer asset isolation and capital supervision systems. However, the risk is that if the definition of “investment contract asset” is too broad, the issuer may quickly remove tokens that originally relied on continuing operation commitments from the securities law framework after limited disclosure. Investors are only protected against fraud in the commodity market, and the development team may still exert influence through control codes or treasury.

Political-ethical disputes became another key variable impeding passage of the bill, focusing on the current president and his family's economic ties to crypto asset projects. Democratic lawmakers are pressing for stricter ethical provisions to restrict the president, senior executives, and their affiliates from issuing, promoting, or holding crypto assets likely to be affected by their policies. Proponents argue that the new text has restricted some acts, but opponents point out that related entities, family members, and existing projects may still benefit from the exceptional structure. The core risk is a lack of sufficient separation between public power decisions and private economic interests: the president can appoint supervisors, influence administrative enforcement, and promote digital asset policies, which directly change the value of the assets or associated projects they hold. Even if the transaction does not constitute securities fraud, the public is concerned that the decision-making process is being infiltrated by private interests.

Furthermore, the Democratic Party questioned the enforcement mechanism, including the ownership of prosecution powers, the possibility of leaving office, and the right of state attorneys general and private parties to participate. Although supporters believe that criticism of being elected was magnified, ethical issues have substantially changed the voting of some members of parliament. If future texts are to regain cross-party support, it is not enough to simply adjust the token classification rules; it is necessary to clarify who the conflict of interest clauses apply, prohibited acts, and execution channels.

The conflict between the anti-money laundering border of decentralized finance (DeFi) and the decentralization of technology poses another major obstacle to legislation. Traditional financial institutions have clear customer identification, suspicious transaction reporting, and sanctions screening obligations, while DeFi protocols are run by smart contracts, and front-ends, development teams, governance organizations, liquidity providers, and validators are scattered all over the place, and a single participant does not necessarily have control over customer identity or transaction control. Porting bank-style obligations completely to the code level is technically difficult to implement, and complete exemptions leave loopholes in funding channels. Committee Democratic Party staff believe that the relevant text leaves excessively broad exceptions for some DeFi services and overseas stablecoin payments, which may weaken control over coin mixers, sanctioned entities, and cross-border illegal funds.

Proponents, on the other hand, are concerned that treating software development, maintaining open source code, or verifying transactions as financial intermediaries will include technical participants who do not control users' assets in licensing and monitoring obligations, forcing development activities to leave the US. The real difficulty lies in defining the regulatory relationship between “control” and “profit”: if the standard is only whether to host private keys, operators with actual influence may escape supervision; if they only profit from transactions and assume full financial institution obligations, liquidity providers and infrastructure nodes may also be overcovered. Future legislation needs to refine the role of technology rather than simply making a one-time judgment on “centralization” or “decentralization.”

The stablecoin earnings dispute has further exacerbated the rivalry between industry and banking. The banking industry is concerned that trading platforms or stablecoin issuers transfer proceeds from reserve assets to holders through “rewards”, creating a fund attraction mechanism similar to deposits, but they are not responsible for deposit insurance, liquidity supervision, and bank capital requirements. The crypto industry argues that banning all rewards would limit platform competition and concentrate revenue in the hands of issuers and large financial institutions. Although this dispute is not exactly the same as the asset classification of the CLARITY Act, it directly affects the willingness of banking groups and some lawmakers to support the entire bill. Since stablecoins already have a specific legislative framework (GENIUS Act), if the Market Structure Act once again deals with revenue distribution, it is necessary to clearly distinguish between payment stablecoins, securities products, platform marketing rewards, and pledge income. Placing these different economic activities under the same ban will not only create evasion structures, but will also exacerbate power conflicts between the SEC, banking regulators, and state regulators, making the compliance environment more complicated.

Against the backdrop of stagnant legislation in Congress, regulators have begun to fill the gaps through explanations and exemptions. In March 2026, the SEC issued an explanation of the Cryptographic Assets and Securities Act, and the CFTC also stated that it would be consistent with it within the scope of the Commodity Exchange Act. The explanation distinguishes between digital goods, digital collectibles, digital instruments, stablecoins, and digital securities, and clarifies what kind of transaction arrangements non-securities cryptoassets may constitute investment contracts and how the related relationships end.

According to data compiled by Woofun AI, on September 17, the day after the Senate procedure failed to vote, the SEC announced an “innovation exemption” for some tokenized stock transactions. The exemption allows eligible tokenized securities exchanges and liquidity providers to be temporarily exempted from the definition of certain exchanges and traders, while retaining conditions such as anti-fraud, anti-manipulation, sanctions compliance, authorized access, and issuer objection rights. The SEC chairman called it a bridge to long-term rules and explicitly mentioned Congress's failure to advance the CLARITY Act.

However, regulatory action has three limitations: the SEC only explains or exempts within the scope of the existing authorization of Congress, and cannot establish its own digital goods spot market system; explanations and exemptions may be reviewed by the court or adjusted as personnel changes in the Commission; although the SEC and CFTC can be coordinated, the budget, enforcement authority, and legal goals are determined by different laws, and the market has an operational window rather than a long-term arrangement as stable as written law.

Looking ahead, US crypto regulation will present three parallel paths. The first article is the reorganization of the text by the National Assembly during the next session. Asset classification, CFTC spot authority, platform registration, and customer asset segregation have formed a more mature module. Completely overturning is costly, more likely to preserve the core structure, renegotiate ethics, DeFi, and stablecoin provisions, and reduce difficulty through narrower or phased legislation. Section 2 is that the SEC and CFTC continue to provide a transitional regime through interpretations, rules, exemptions, and joint declarations. For tokenized securities, escrow, brokerage transactions, and on-chain settlement, such measures can open channels for specific products, but their stability depends on legal authorization, administrative procedures, and judicial decisions, and enterprises need to reserve space for rules to be withdrawn and opinions across institutions to be inconsistent.

Section 3 is a supplementary role for state laws and state-level licenses. New York and other states have managed some agencies through virtual currency licenses, trust companies, and fund transfer systems. In the absence of federal law, businesses still have to deal with multi-state licensing, consumer protection, and state securities laws. Large platforms have the resources to establish multi-tier compliance systems, while small to medium projects may restrict US users or move to regions with more uniform systems. The coexistence of the three paths will result in scattered sources of rules and lower legal stability than a single federal framework. Institutional investors face compliance costs such as repeated registrations, changes in asset classification, and uncertain post-transaction responsibilities, while regulators will have to deal with the risk of similar activities entering different systems due to different product packaging.

The failure of the CLARITY Act was essentially a breakdown in the political-legislative alliance. Proponents (mostly Republicans) pursue industrial innovation, CFTC expansion, investor protection, and national competitiveness; opponents (mainly Democrats) adhere to ethics, national security, financial stability, and the integrity of securities laws. The 49-50 vote shows that although both sides acknowledge the need for rules, there is a lack of consensus on the subject, extent, and political power restraint of regulation.

However, the need for market structure legislation has not disappeared. Token issuance, secondary transactions, escrow, and on-chain securities are still developing, and the SEC has responded to actual business through explanations and temporary exemptions. For some time to come, the US crypto market may obtain licenses for more specific scenarios, but it still lacks a unified framework that is stable across cycles. Whether the next version of the bill can be passed depends on whether the drafters are willing to reduce the number of issues to be solved at once and establish enforceable boundaries for the most contentious part: asset classification needs to connect continuous disclosure and control relationships, DeFi obligations need to be layered around actual control capabilities, ethical provisions must cover related interests and enforcement mechanisms, and stablecoin rewards need to be handled separately according to funding sources and economic functions. Only in this way can “clarity” be transformed from a legislative slogan into a rule that market participants can rely on for a long time.