Key facts
- Bernstein anticipates aggressive SEC and CFTC rulemaking after the CLARITY Act failed to pass.
- The CLARITY Act, a comprehensive crypto market-structure bill, failed to advance in the Senate.
- Seven Democratic senators who voted against the bill have pledged to pursue it in a bipartisan manner.
- CFTC Chair Mike Selig stated the agency is ready to issue its crypto rules.
- Michael Saylor predicts the CLARITY Act's failure will drive capital to Bitcoin.
- The House Ways and Means Committee advanced a federal crypto tax framework the day after the Senate vote.
The U.S. Senate's failure to advance the Digital Asset Market CLARITY Act has prompted analysts at Bernstein to anticipate aggressive rulemaking from the SEC and CFTC. The bill's defeat, by a 49-50 vote, means regulators will likely rely on existing authorities to establish rules for digital assets, a path that Michael Saylor predicts will drive capital towards Bitcoin.
Seven Democratic senators who voted against the bill have vowed to continue pursuing it in a bipartisan manner, acknowledging the "two years of work" invested. However, with only about 14 working days remaining before the Senate floor is consumed by campaign season, the path forward remains uncertain. Republicans had rejected a last-minute counterproposal from Democrats hours before the vote, and Sen. Cynthia Lummis declared the bill "over" for this Congress.
Despite the legislative setback, the CFTC stated it is ready to issue its crypto rules, with Chair Mike Selig indicating a willingness to work with President Trump to advance them. Both the CFTC and SEC chairs have pledged to finalize rules using their current powers. Meanwhile, the House Ways and Means Committee advanced a federal crypto tax framework by a 38-5 vote the day after the Senate's decision, indicating a two-track legislative approach.
Ripple CEO Brad Garlinghouse attributed the CLARITY Act's failure to Democratic politics, though the company's chief legal officer maintains XRP has regulatory clarity through existing rulings. The failure of the bill led to a sharp sell-off in Bitcoin, Ethereum, and XRP, with spot Bitcoin ETFs experiencing a $450 million outflow in a single day.