Quick Breakdown
- Nobody in US crypto quite knows where they stand. The CLARITY Act was supposed to change that, by drawing a clear line between which digital assets count as securities and which are commodities, and settling the long-running turf war between the SEC and the CFTC.
- As of today, we are at a stalemate. Stakeholders are divided, banks are alarmed about stablecoins eating into their deposits, and some of the crypto industry’s biggest names have pulled their support from the bill entirely.
- The longer it sits, the harder things get for crypto protocols trying to stay on the right side of the law, for institutions (armed with swaths of capital) watching from the sidelines, and for founders quietly considering friendlier jurisdictions.
Crypto regulation in the United States has been in a holding pattern for some years now. Companies build products, investors put in money, and everyone operates under a quiet understanding that the rules could change at any moment because, technically, nobody has written them yet.
The CLARITY Act was supposed to be the answer. The bill set out to do something simple in theory but enormously complicated in practice: decide, once and for all, which digital assets fall under securities law and which are treated as commodities. And while it was at it, settle the long-running question of whether the SEC or the CFTC gets to be the one calling the shots.
It has not gone to plan. More than 270 days after the House passed the bill with bipartisan support, the Senate has yet to move it an inch forward. The reasons are several and they say a great deal about just how difficult it is to write one law that makes a crypto firm, a commercial bank, and a Senate committee all happy at the same time.
Why the CLARITY Act Is Being Delayed
There is no single villain in this story. The bill has slowed down the way most legislation does, under the weight of too many competing interests, each with a legitimate reason to want things done their way.
Lawmakers want more time — and more voices in the room
Senator Thom Tillis (R) of North Carolina, though not obstructionist on the surface, has stated that lawmakers need more time to hear from stakeholders in both the crypto and banking sectors before moving forward.
He indicated that the Senate Banking Committee is unlikely to advance the CLARITY Act bill in April, and suggested that Senate Banking Chair Tim Scott consider pushing the timeline to May instead
Tillis reportedly told Tim Scott:
“It’s very important to me not to accelerate things, to hear everybody, and give them a rational basis for what we do accept.”
This signals that the bill’s timeline will likely depend on how well lawmakers can balance competing concerns from both industries.
The industry that wanted this bill is now walking away from it
One of the most immediate triggers was the public withdrawal of support from key crypto industry players. As the draft evolved, some major participants raised concerns about new provisions, arguing that a flawed bill could be worse than having no legislation at all.
In an interview with Paul Barron, Morgan Creek Capital CEO Mark Yusko criticized the CLARITY Act, calling it “a horrible bill” and warning that its passage may not lead to the bullish shift many investors expect.
Instead, he suggested bearish conditions could persist into the later months of the year. Yusko also questioned the intent behind the legislation, arguing it appears to favour “big incumbents,” the very banks that crypto was supposed to offer an alternative to. In his view, passing a bad bill may leave the industry worse off than having none at all.
This loss of industry backing made it harder for lawmakers to move forward, ultimately contributing to the decision to delay the markup.
Disagreements over stablecoin rewards
If one issue has exposed the gap between traditional finance and the crypto world more than any other, it is the question of yield-bearing stablecoins — stablecoins that pay interest to holders. Banking groups argued that yield-bearing stablecoins function much like deposits but operate outside the traditional regulatory framework. Bank of America CEO Brian Moynihan warned that interest-bearing stablecoins could pull as much as $6 trillion out of the US banking system. Less money in deposits means less money to lend, which means higher borrowing costs for ‘ordinary people’ which from a bank’s perspective, is a systemic problem.
Bank of America CEO on why stablecoins shouldn’t pay interest:
(TLDR: consumers shouldn’t earn yield so banks can)
Quick summary:
Interest on stables -> mass deposit flight
Fully reserved money -> no fractional leverage
Banks lose free funding -> profits go bye bye! https://t.co/WE5P7F6V48 pic.twitter.com/2ebBx82NE9— Omar (@TheOneandOmsy) January 15, 2026
From the crypto side, the reaction has been equally firm. Circle CEO Jeremy Allaire pushed back, arguing that stablecoin interest payments are not large enough to meaningfully undermine monetary policy or cripple banks. He framed yield features not as a threat, but as a product benefit, something that keeps customers engaged.
Quoting Allaire, “they help with stickiness, they help with customer traction”, adding that “interest itself is not large enough to undermine monetary policy”.
Both sides believe they are right. And until a truce is reached, the bill may not move far.
Supporters Argue CLARITY Act Cannot Wait Any Longer
As pressure builds around the timeline for US crypto regulation, The Digital Chamber has formally sent a letter to move forward with crypto market structure legislation and bring it to markup as soon as possible.
The group highlighted that more than 270 days have already passed since the House passed the CLARITY Act with bipartisan support, arguing that progress has stalled for too long.
The Digital Chamber’s government affairs director, Taylor Barr emphasized the urgency of the situation, stating that regulatory clarity is overdue and that over 70 million Americans involved in digital assets have already waited too long for clear rules.
On the political side, Cynthia Lummis has also pushed back against efforts to delay the bill, making her position clear that the process must continue. In remarks to Crypto In America, she said any further delay is “unacceptable.”
Lummis also pointed to the bipartisan progress already achieved, cautioning against losing momentum in pursuit of a “perfect bill” that may never come. She warned that the risk of innovation moving offshore is growing and stressed that the window for action is narrowing, concluding that it is time to finalize the legislation.
Implications for the Crypto Economy
While lawmakers debate timelines and industry groups trade letters with Senate committees, the people actually building and using blockchain/crypto products and services are left to get on with it, without regulatory guidelines. This isn’t a sustainable position, and the longer it continues, the more it affects the industry in ways that are difficult to reverse.
The most immediate consequence is that crypto protocols are still operating in legal grey. Without a framework designed for them, they are left interpreting laws written for a different era of finance and hoping their interpretation holds up if a regulator comes knocking.
Regulators, for their part, are not sitting idle. In the absence of new legislation, enforcement actions become the default tool for drawing lines. That means the rules get written retroactively, after someone has already crossed them, not exactly the stable environment that encourages responsible innovation.
Token projects and crypto exchanges are feeling this too. Greater regulatory scrutiny without clearer guidance means more exposure, more legal risk, and more resources spent on compliance rather than product. For smaller projects, especially, that overhead can mean the difference between choosing to launch or not.
Then there is the institutional question. Large investors and financial institutions do not typically move into new territory without a clear legal map. Without it, cautious money stays on the sidelines, and cautious money is often the kind that brings scale.
One of the CLARITY Act’s central promises was settling the securities-versus-commodity debate for tokens, and an unanswered question in that space affects everything downstream — how tokens get listed, how projects raise funds, and how exchanges decide what they can and cannot offer.
Perhaps the most quietly significant implication is geographical. Founders and developers watch regulation closely. Countries that have moved to establish clear digital asset frameworks are becoming increasingly attractive to folk the US would rather keep.
The Cost of Further Delay
The CLARITY Act not passing does not mean the crypto industry stops. Projects will still launch. Protocols will still be built. Money will still move. But all of it will happen under a cloud of legal uncertainty that forces everyone involved to move more carefully than they otherwise would. Legal risk becomes a permanent line item. Launches get delayed. Decisions that should take weeks take months, because nobody wants to be the test case that defines the rules for everyone else.
The uncomfortable truth is that regulatory uncertainty is not a neutral condition. It has winners and losers. The winners tend to be large, well-resourced institutions with the legal teams to navigate ambiguity. The losers tend to be smaller operators, independent developers, and the end users who were supposed to benefit from a more open financial system.
Disclaimer: This article is intended solely for informational purposes and should not be considered trading or investment advice. Nothing herein should be construed as financial, legal, or tax advice. Trading or investing in cryptocurrencies carries a considerable risk of financial loss. Always conduct due diligence.
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