Melker Bengtsson
TL;DR
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The CLARITY Act failed to progress in the Senate after Democrats and Republicans were unable to arrive at a compromise.
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More than 40 Senators voted against the bill, making it a mathematical impossibility to reach the 60 votes needed.
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Bitcoin dropped 3% when it became clear that the cloture vote would not pass.
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The future of the CLARITY Act is now uncertain, with another vote this year potentially difficult.
The CLARITY Act failed to progress in the senate. The negotiations in the dying hours before the vote was not enough. 60 votes were needed but in the end but at this point, more than 40 Senators has voted against, which makes it a mathematical impossibility.
Democrats and Republicans Fail to Reach a Compromise
Democrats and Republicans were unable to arrive at a compromise, mainly over the hotly contested ethics provision. After making 126 changes, including concessions with regards to officials’ holdings, state attorneys general's enforcement ability as well as other minor changes, Republicans published what they called their “best, last and final offer” on Sunday.
That offer was rejected by Democrats who, late on Monday night, sent a counterproposal. Seeing as the Republicans had made their last offer, the time had run out to strike a deal.
Bitcoin dropped 3% when it was clear that the cloture vote on the bill would not pass. The future of the CLARITY Act is now uncertain. While it’s definitely not dead, and the last word is not said on neither the ethics provision nor the community banks’ guardrails, another vote this year may be difficult.
The House leaves after this week and does not come back until November, there’s midterm elections and other things that will take up time on the Senate floor going forward. Senator Cynthia Lummis has warned that it may not pass this decade, if this vote fails. This may be hyperbole.
US Agencies May Now Fill the Regulatory Void
What’s likely is that agencies will now start regulating crypto. The SEC has already started pushing new rules, such as Reg Crypto, and so have other agencies. And they can fill the void that a market structure bill would have but their rules can be changed by the next administration. The CLARITY Act would have made the rules clear going forward.
