Earlier this week, the Senate Banking Committee appeared poised to advance the Digital Asset Market CLARITY Act, a sweeping effort to establish a comprehensive federal framework for digital assets. The legislation passed the House during last summer’s “Crypto Week.” See our post here. The momentum evaporated after leading industry participants publicly withdrew support for the bill’s revised text. Within hours, on January 14, committee leadership delayed the markup, with no new date announced. The Senate’s sudden postponement offers a timely lesson in how difficult it remains to legislate cryptocurrency in the United States—even after years of bipartisan calls for “regulatory clarity.”
The delay does not mark the end of the CLARITY Act. But it does illuminate the political and structural obstacles that continue to shape U.S. crypto regulation—and suggests why enforcement, rather than legislation, remains the dominant regulatory tool.
From Consensus to Conflict
At a high level, the CLARITY Act addresses a question that has defined the last decade of crypto enforcement: which federal agency regulates which digital assets. The bill seeks to allocate authority between the Securities and Exchange Commission and the Commodities Futures Trading Commission, classify digital tokens by function, and replace regulation by enforcement with statutory standards.
That framework has long enjoyed nominal bipartisan support. Trouble emerged, however, as draft language moved from principle to implementation. Two issues proved especially divisive. First, stablecoin rewards became a flashpoint. Banking interests have argued that yield‑bearing stablecoins operate as de facto deposits, yet are outside the insured banking system. Crypto firms, by contrast, view yield as integral to consumer utility and innovation. Recent draft restrictions on stablecoin rewards drew sharp industry criticism.
Second, developer and DeFi exposure reopened debates over when software development becomes regulated financial activity. Industry participants warned that proposed provisions could subject non‑custodial developers—who neither control user assets nor operate intermediaries—to compliance regimes designed for centralized actors. These concerns resonate amid recent criminal cases involving blockchain software.
Another contributor to the impasse concerned ethics provisions. Democrats on the committee continued to press for stronger safeguards that bar senior government officials, including the president, from personally profiting from crypto ventures. The White House has repeatedly pushed back on this issue.
The Power (and Risk) of Industry Opposition
The withdrawal of support from major industry players proved decisive. One public statement saying that a flawed bill was worse than no bill at all effectively halted legislative progress, at least temporarily. The episode illustrates the growing political influence of major crypto intermediaries. But the industry reaction was not one-sided. Several major firms and advocacy groups publicly reaffirmed their support for moving forward with a markup.
For lawmakers, the choice is unenviable: advance a bill that alienates influential market participants, or delay reform and accept continued regulatory uncertainty. For regulators, the vacuum reinforces reliance on discretionary enforcement and informal guidance. And for courts, it ensures that crypto law will continue to develop incrementally through litigation rather than comprehensive statute.
Next Steps
The CLARITY Act delay should not be read as a rejection of federal crypto legislation. Instead, it reflects three broader realities. First, crypto regulation has entered a second phase, where the hardest questions concern statutory detail rather than conceptual authority. Second, industry consensus is fragile—particularly where regulation intersects with traditional financial interests. Third, legislative progress is likely to be incremental, uneven, and politically contingent.
Despite the setback, Senate Banking Chairman Tim Scott, remains optimistic that the bill will eventually cross the finish line. He said that his Democratic and Republican colleagues “remain at the table working in good faith,” but he did not offer a new date for the markup or specify which issues would need to be resolved before it could be rescheduled.
The Senate Agriculture Committee, which has jurisdiction over the CFTC-related portions, separately scheduled its own markup for later in January (reportedly January 27, 2026). Leadership indicated that the delay was intended to preserve bipartisan negotiations, not abandon the legislation.
The CLARITY Act’s pause underscores a paradox at the heart of U.S. crypto regulation: broad agreement that clearer rules are necessary, coupled with repeated inability to agree on what those rules should be. Until Congress resolves that tension, regulatory clarity will remain aspirational—and delay will remain the governing reality.
