Two routes now open after heavy blow to crucial crypto bill

The most important U.S. crypto bill at the moment was stalled on Tuesday. The Senate did not receive enough votes to open the debate on the CLARITY Act.

The official result was 49 in favor and 50 against. 60 votes were needed. This leaves a significant problem unresolved. The United States still lacks comprehensive national regulations for trading many cryptocurrencies.

This also affects investors. These rules determine, among other things, which coins a trading platform offers, how it stores customer funds, and what protections users receive.

However, the bill is not dead yet. The Senate can vote again. If a political agreement cannot be reached, U.S. regulators can adjust some of the rules themselves.

In brief:

• CLARITY aims to clarify who oversees crypto and trading platforms.

• The bill stalled mainly due to disputes over President Donald Trump's crypto interests.

• Without an agreement, regulators will create their own rules, but these are less robust than a law.

Why America wants new crypto regulations

America has two major financial regulators. The SEC oversees trading in investments such as stocks. The CFTC supervises contracts that trade on the future price of commodities like gold and oil.

In crypto, these roles overlap. Some coins resemble an investment in a company. Others function more like a loose digital trading medium. As a result, it has remained unclear for years where the SEC's responsibilities end and the CFTC's begin.

CLARITY is meant to draw that line. The SEC will remain responsible for crypto that falls under investment regulations. The CFTC will gain more oversight over other coins. Crypto exchanges must register, keep customer funds separate, and be clearer about risks and their own interests.

Thus, the law does not automatically approve or reject a cryptocurrency. It primarily determines who controls the market and what basic rules companies must follow.

Dispute over Trump's crypto interests blocks agreement

The latest version was negotiated for over a year. Republicans claimed to have incorporated 126 requests from Democrats. Stricter rules for politicians with crypto interests were also introduced.

Yet one conflict remained. Democrats want to prevent a president from creating crypto policy and profiting from it.

They demanded, among other things, that large personal crypto interests be sold or completely divested. The text did not go far enough for them. Three Republicans also voted against it.

Therefore, a stronger agreement is needed regarding the interests of Trump and other officials for 60 votes. Republicans also need to win back their own defectors. Seven Democratic senators indicated after the defeat that they want to continue discussions.

CLARITY may get one more chance

The Senate may make another attempt this year. Republican Thom Tillis kept that possibility open by asking for a new hearing after the vote.

However, there is not much time left. A revised bill must go through the Senate again, and the House of Representatives must also agree. The main Republicans in the House say they want to proceed.

If this does not happen before the current Congress ends in early January, the proposal will lapse. The process must start over in 2027. After the elections, the balance of power could also be very different. Therefore, Tuesday was already seen as possibly the last chance of this year.

Without a law, regulators take charge

The SEC and CFTC are not waiting. In March, they already provided new guidance on which crypto is treated as an investment and which is not. They also clarified rules for creating, locking, and distributing cryptocurrencies for free.

The SEC can make exceptions for crypto projects that raise funds. It can also adjust rules for storing and trading digital investments.

The CFTC can tackle fraud and price manipulation. Additionally, it can create rules for trading where people bet on crypto prices with borrowed money. Therefore, something can happen even without CLARITY.

However, this is not a complete replacement. Regulators must work with old laws that were not written for crypto. As a result, the CFTC cannot suddenly oversee all regular crypto trading.

New rules can also be blocked by a judge. A future government can change them again.

A real law stands stronger. It can grant new powers and is much harder to reverse. SEC Chairman Paul Atkins therefore calls legislation essential for lasting clarity.

For Dutch crypto investors, the consequences mainly lie in what American trading platforms and crypto companies will be allowed to offer in the future. New rules can determine which coins remain available, how customer funds are protected, and what products come to market.

Since the United States is one of the most important crypto markets in the world, such choices can also have repercussions outside America.

The real question now is who writes the rules: Congress for the long term, or regulators as long as a new law is pending.