Clarity Act Delayed... again...

As I'm sure those of you in crypto are already aware, this week the Clarity Act was delayed yet again, failing to meet the August recess deadline. Today I'm going to give my opinion on this, nothing in this article is financial advice!

Before I dive in, a quick word on why a tech consultant is writing about Senate legislation: crypto and blockchain rails are part of the tech landscape I work in, and staying informed on the regulatory side is just as much a part of the job as staying current on the technical side. If you're a business owner wondering whether crypto fits into your product or payment stack, this is exactly the kind of thing I'd be tracking on your behalf. So, with that out of the way, let's get into it.

What is the Clarity Act?

The Clarity Act is a piece of legislation designed to bring, well, clarity to the crypto industry. In particular, which cryptos are securities and which are commodities. To us normal people, these two words are almost meaningless unless we have a background in finance or investing. Very oversimplified, you can think of securities as stock type investments and commodities as goods such as gold. You would think that it would be easy to classify the difference between these two, but alas this is government, nothing is easy or makes sense... the SEC is the government body over securities, which under the Biden administration and the feared Gary Gensler reign was very anti crypto and earned the nickname "Regulation by Enforcement" (or in other words, we don't tell you the rules, but fine companies for breaking them). The CFTC, which oversees commodities, has historically been more crypto friendly. The issue arises when both claim to have jurisdiction and it is not extremely clear who is right because the laws were mostly written decades ago for older financial products before anyone had even dreamed of Bitcoin, let alone the millions of other cryptos that would follow. This dilemma was the original primary motivation the Clarity Act sought to solve. Not only does the uncertainty spook investors who aren't sure what tax laws they'd fall under, but arguably more importantly it spooks businesses because they can't be sure if the product they're making is even legal. This discourages investment on the personal and business level, slowing industry growth and pushing businesses and products off shore. In the words of Cynthia Lummis (the senator leading the charge on this):

"The CLARITY Act will finally give American innovators the certainty they need to build the future of finance here at home, instead of overseas." — Sen. Cynthia Lummis (R-WY), remarks introducing the Senate companion to the CLARITY Act, July 2025

So what's the hold up?

The Clarity Act passed the House over a year ago, but has been stuck in the Senate ever since. If everyone can clearly see the benefits outlined above, what's the hold up? Why delay after delay? The answer is both simple yet annoying... politics.

Trump, a crypto blessing and a curse

Back during the 2024 Presidential campaign Trump came out as pro Bitcoin and pro crypto. The community mostly celebrated, crypto finally had a champion in Washington (well, post election) that could and would finally do some good for the crypto industry. To be fair, Trump did do some good for the industry, such as ending the reign of Gensler-era enforcement. However, along with Trump came opposition in the Senate that's been reluctant to hand a legislative win to the other side of the aisle, regardless of the bill's actual merits.

"To get this across the finish line, we need at least seven Democrats. Right now, we have zero." — Senate Majority Leader John Thune (R-SD), press conference, August 2025

Now let's also be clear, Trump hasn't been perfect either. Leading up to his inauguration, he and his wife each launched a meme coin which turned them a profit. Regardless of whether you believe this was legal or not, there's no denying it gave critics plenty of ammo to point the finger and shout with. In the latest delay of the Clarity Act, they wanted more ethics provisions that would make what Trump did illegal. To me, putting parties aside, this is beyond frustrating. In case you didn't notice, ethics wasn't mentioned once in the opener. I agree politicians shouldn't be able to enrich themselves off the office, but that was never the main goal of the Clarity Act, and it's a shame this is what's holding it up. It's frustrating that Trump handed them the ammo, and it's frustrating that a bill about market structure keeps getting blocked over a fight that's really about something else entirely.

Let's not forget about the bankers...

The only thing more frustrating than the above is the bankers lobbying with everything they've got to derail it as well. Earlier the GENIUS Act passed, which laid out the laws on stablecoins (cryptos pegged to the dollar, i.e. always worth $1.00, unless something goes wrong and they lose their peg, but that's a whole different article). Forget the FUD (fear, uncertainty, doubt i.e. propaganda) you see the bank CEOs spreading in interviews, they simply hate the competition, plain and simple. Finance built on crypto and stablecoins is faster, cheaper, and arguably better in plenty of ways than the traditional finance sector. Explain why in 2026 it still takes days to move money from one bank account to another. The banks can't compete on tech, so they went to Washington and thought they had stablecoins ruled out and their moat protected with the GENIUS Act. However, there was a clause in there, and I can't believe this slipped by the banks, that allows companies like Coinbase to pass on yield to their customers, extremely similar to how a savings account operates, with one key difference. With your bank savings account, you'll be lucky to get 0.25% APY, maybe 0.5% if you're special. My USDC on Coinbase earns a base rate of 4% APY, and the last few weeks, under some promotion I don't fully understand but also don't question, I've been earning 7% APY. At the base rate, that's 16x better than my bank's savings account, and under the recent promotion, 28x better. The math couldn't be simpler on where to put my money. Instead of raising their rates to be competitive, the banks headed to Washington and threw their well funded lobbyists at the issue, and have been fairly successful in delaying it. Recent news says they reached a compromise everyone could accept, but then came the ethics fight described above, and that compromise stalled out too. Maybe the bankers knew all along that fight would resurface and stop the bill, so they decided to stop playing the bad guy and let the politics do it for them. Who knows.

So where does this leave us?

The law

In terms of the law, the SEC and CFTC have been much more cooperative with each other lately under new leadership, and in the absence of the Clarity Act, they'll continue to roll out more and more of their own guidance. This is great for the short term; however, the boogeyman lying in wait is the possibility that the next administration in a few years appoints less crypto friendly heads of these organizations, who could scrap everything in an instant, since only legislation that makes it all the way through Congress and gets signed into law is durable (mostly.. Congress can always pass more, but that's a much harder feat).

The market

Again, NOT financial advice

In terms of market moves, the Clarity Act has dragged on so long that the market barely seems to react to news on it anymore. Case in point: the day the delay was announced, BTC barely budged, closing down less than 1% (around -0.7%) a rounding error compared to the massive swings crypto is used to. There will likely be a small pump when it finally does get approved (I'm not holding my breath) followed by a small dump of people selling off the gains. Final point worth noting, we are still in the crypto bear market so I don't foresee any sustained gains until Q4 regardless of what the Clarity Act does, but as always do your own research :)