WASHINGTON — Congress has spent years arguing about who should regulate cryptocurrency in the United States, and for most of that time the answer has been: no one, clearly. The House tried to change that in July 2025, when it passed the Digital Asset Market Clarity Act, known as the CLARITY Act, by 294 votes to 134. The Senate Banking Committee then approved its own version in May 2026 by 15 votes to 9. But when the full Senate tried to open debate on September 15, 2026, the effort failed, 49 to 50, eleven votes short of the 60 needed to overcome a filibuster.
As of late October 2026, the bill is therefore not law, no new Senate vote has been scheduled, and negotiators face a narrowing calendar. The 119th Congress ends on January 3, 2027, and the Senate was out for a state work period running into early November, ahead of the November 3 midterm elections. Supporters insist the core market-structure deal is still within reach in a lame-duck session. Critics say the disputes that sank the September vote — ethics rules for officials who hold crypto, limits on stablecoin rewards, and safeguards against illicit finance — have not been resolved, and may be harder to resolve after an election than before it.
The stakes go beyond traders. The bill would decide, for the first time in statute, which assets are securities overseen by the Securities and Exchange Commission and which are commodities overseen by the Commodity Futures Trading Commission, and set registration and customer-protection rules for exchanges, brokers, and dealers.
What the crypto market structure bill would regulate
The central idea is a division of labour. The Commodity Futures Trading Commission would gain authority over spot markets for digital commodities, such as bitcoin and ether, while the Securities and Exchange Commission would retain authority over tokens sold as investment contracts. Under current law, firms have often had to guess which regime applies, and that uncertainty, supporters argue, has pushed innovation and trading volume overseas.
The bill would require spot digital-commodity exchanges, brokers, and dealers to register at the federal level, in the Senate version principally with the Commodity Futures Trading Commission. Registered firms would face requirements on disclosure, record-keeping, segregation of customer assets, and conflicts of interest. The aim, supporters say, is to prevent a repeat of earlier crypto collapses, when customer assets were mixed with company funds or lent out without clear consent or adequate reserves.
The legislation would also create a token-classification framework, distinguishing digital commodities, assets offered through investment contracts, permitted payment stablecoins, and securities such as tokenised shares. Stablecoins are treated separately because they already have a partial regime under the GENIUS Act, and fitting the two laws together has been technically difficult.
Who supports the bill, and who does not
In the House, support was genuinely bipartisan: all 216 voting Republicans and 78 Democrats backed the bill in July 2025. In the Senate Banking Committee, the 15-to-9 vote in May 2026 also included Democratic support, from Senators Ruben Gallego and Angela Alsobrooks among others. The Senate leadership behind the effort has included Banking Committee Chair Tim Scott and Senator Cynthia Lummis, both Republicans, who have argued that a clear federal framework will protect consumers better than the current patchwork and keep the United States competitive.
The crypto industry is no longer united behind the Senate text. Coinbase chief executive Brian Armstrong withdrew his company’s support in January 2026, in part over planned changes that would have restricted stablecoin rewards. Other firms have continued to lobby for the bill, arguing clear rules will bring institutional investment and stronger consumer protections than the status quo.
Opposition in the Senate came from a different direction. Every Democrat present voted against opening debate on September 15, joined by four Republicans: Susan Collins of Maine, Josh Hawley of Missouri, Jerry Moran of Kansas, and Thom Tillis of North Carolina. Tillis voted no for a procedural reason — only a senator on the winning side of a failed cloture vote can move to reconsider it — which keeps a formal path open to bring the bill back. Senate Democrats, led in the debate by Senator Elizabeth Warren among others, said their objection was not to market structure in principle, but to provisions they said were too weak, above all on ethics and illicit finance. Banking groups pressed from the opposite side, warning generous stablecoin rewards could draw deposits out of community banks. The result was a bill squeezed from both sides.
The consumer protection debate at the heart of the bill
Supporters frame the CLARITY Act first as a consumer-protection measure. Registration, they argue, gives regulators power to examine a firm, require audited statements, police conflicts of interest, and act before a collapse. Customer-asset segregation is presented as a direct lesson from past failures: if a firm fails, customers should recover their own assets, not stand in line with general creditors.
Critics respond that registration without strong enforcement, adequate funding for the Commodity Futures Trading Commission, and clear anti-money-laundering duties would create a false sense of safety. They argue registered firms should be treated explicitly as financial institutions under the Bank Secrecy Act, with written anti-money-laundering programmes, identity verification, sanctions screening, and suspicious-activity reporting as legal duties. Supporters say the Senate text moved in that direction, including a stronger role for state attorneys general and a Treasury circuit breaker on stablecoin rewards. Critics say those additions did not go far enough.
The stablecoin rewards dispute shows how consumer protection, banking policy, and industry competition collide in a single provision. The Senate version would bar exchanges and other service providers from paying customers interest or interest-like rewards purely for holding a payment stablecoin, while permitting rewards tied to genuine use, such as transaction, loyalty, payment, or liquidity activity. Banks argue that even that narrower permission could drain deposits, because a stablecoin reward can function like interest on a bank account without the same regulatory costs. Crypto firms argue that a broad ban would stifle a legitimate product and hand banks a competitive advantage. Neither side has accepted the other’s framing, and the provision remains one of the most lobbied parts of the bill.
Ethics, the flashpoint that sank the September vote
If one issue turned a market-structure negotiation into a partisan flashpoint, it was ethics. Democrats wanted rules on crypto holdings by federal officials and their families that would clearly cover the president, and they said the final Senate text fell short. Republicans pointed to more than 100 revisions made at Democrats’ request, and to tighter ethical standards for covered officials and their spouses in the final version. Democrats countered that the ethics provision was due to expire in January 2029 in its current form, and that a late Republican rejection of a Democratic counteroffer — seeking stricter language and wider inclusion of officials’ families — showed the text was not serious enough.
Seven Democrats have since reopened talks, led by Senator Kirsten Gillibrand, pledging to pursue the bill in a bipartisan fashion, according to later reporting. That suggests September was a failure of a particular text at a particular moment, not necessarily a rejection of market structure altogether. The lame-duck session will test whether those talks can move at least eleven senators.
What remains unresolved, and what happens if Congress does nothing
Three questions remain open, and each could decide the bill’s fate. First, can negotiators agree on ethics language that Democrats consider credible and Republicans consider fair, without an expiry date that undermines it? Second, can they settle the stablecoin rewards line in a way that banks, crypto firms, and consumer advocates can all accept, or at least tolerate? Third, can they agree on decentralisation, DeFi front-ends, and illicit-finance safeguards that give regulators real tools without driving developers offshore?
If those questions are not answered, the bill will expire with the 119th Congress on January 3, 2027, and a successor would have to start from scratch in the 120th Congress. Prediction markets in mid-October gave Democrats a substantial chance of winning both chambers in November, according to Polymarket data cited in reporting at the time. A change in control would not outlaw cryptocurrency, but it would give Democrats control of the financial-services committees, and a successor bill would likely include stronger conflict-of-interest protections.
In the meantime, regulators are not waiting. Since March 2026, the Securities and Exchange Commission has listed bitcoin, ether, XRP, and Solana, among others, as digital commodities in its guidance, and the Commodity Futures Trading Commission opened a further consultation on October 5, with comments due by December 14, 2026. Supporters argue agency action cannot substitute for statute: it can be reversed by a future administration and leaves firms to navigate guidance rather than settled law.
Opponents of rushing a bill make the opposite point: a flawed statute is harder to fix than flawed guidance, and a law that locks in weak ethics or anti-money-laundering rules could do more harm than the current uncertainty. Congress can try again with a revised text, let the bill die and start over next year, or leave market structure to regulators and the courts. None, on the evidence of September 15, commands 60 votes in the Senate today.
Sources
USN reviewed reporting from multiple outlets for this story. Read more from Blockchain Reporter, CoinStats and Sumsub.