CoinDesk
The Digital Asset Market Clarity Act, the flagship US crypto market structure bill, is effectively dead for 2025 after Senate Majority Leader John Thune told reporters the legislation will not clear Congress before September. With election-year campaigning expected to consume the autumn and Democrats projected to retake at least one chamber, a bill of this scope is unlikely to resurface before 2029.
The proximate cause was a breakdown over the ethics clause that would bar the President and senior federal officials from issuing crypto tokens while in office. Republicans struggled to thread a needle between Democratic demands for the prohibition and President Trump's well-documented personal token launches, and the negotiated language drew sharp pushback from Senate Democrats. Sen. Ruben Gallego dismissed the counter-proposal as not a serious effort, a signal that bipartisan support has collapsed.
Why it matters
The bill's failure exposes a fault line the industry had papered over. Aaron Brogan's analysis in CoinDesk's Crypto for Advisors argues Clarity's core bargain is unattractive: a network token can escape the ancillary-asset regime only if developers relinquish coordinated control and cease being the primary source of value, an impractical endpoint. Developers who retain control must instead satisfy Regulation Crypto's initial and semiannual disclosure regime, recreating much of the burden that already pushed issuers offshore.
The legislation also fails to address the tax incentive to incorporate in the Cayman Islands or similar jurisdictions, since Regulation Crypto is limited to US-organized originators and offers no special federal tax treatment for token sales. That structural gap means the new pathway may be commercially unusable for the largest cohort of token issuers.
Market impact
For US-based issuers and advisors, the short-term read is regulatory limbo persists. Trevor Overko, in the same newsletter, framed the bill as directionally right because it separates the fundraising transaction from the underlying network asset, but warned implementation risk could simply move uncertainty from the courts into rulemaking if the SEC and CFTC apply conflicting standards.
The bigger question is what comes next. With Clarity off the table, the industry loses its cleanest legislative vehicle for years, leaving existing enforcement-driven SEC and CFTC jurisdiction as the default framework heading into the next Congress.
Frequently asked questions
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Why did the Clarity Act fail in Congress?
A breakdown over the ethics clause barring the President and senior officials from issuing crypto tokens collapsed bipartisan support, and Senate Majority Leader John Thune conceded the bill will not pass before September, freezing it through election season.
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What is the Clarity Act's main flaw according to critics?
Industry analysis argues the bill's core bargain is unattractive: network tokens can escape the ancillary-asset regime only if developers relinquish coordinated control, while developers who retain control must satisfy extensive Regulation Crypto disclosures that recreate the burden pushing issuers offshore.
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How does the Clarity Act treat offshore token issuers?
Regulation Crypto is limited to US-organized originators and provides no special federal tax treatment for token sales, meaning the new pathway is likely commercially unusable for projects structured through the Cayman Islands or similar jurisdictions.
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Could the Clarity Act pass in 2026?
With election-year campaigning expected through autumn and Democrats projected to retake at least one chamber, a market structure bill of this scope is unlikely to resurface before 2029 absent a major shift in political dynamics.
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What replaces Clarity if it dies?
Existing enforcement-driven SEC and CFTC jurisdiction remains the default framework, leaving token classification uncertain and pushing US-ambitious issuers to keep routing through offshore structures while lobbying intensifies for a revised bill.
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