Seven Democratic senators “remain committed” to enacting the CLARITY Act, even as a key supporter of the bill says the legislation faces an uphill battle before November’s midterms. Congressman Thanedar supports the bill in its current form but says Tuesday’s failed vote shows the need for more bipartisan drafting.
The vote failed, and the path forward depends on whether the crypto industry can stomach new restrictions on stablecoins and self-custody. The industry’s top lobbyist, Kirsten Chassé, has told the paper that the fight is now about Trump’s crypto holdings six weeks before an election. She argues the text as written cannot survive that referendum.
The Failed Vote and Its Aftermath
Tuesday’s vote was a test of whether the Senate could unite behind the CLARITY Act. The vote failed.
Democrats see the setback as evidence that Republicans need to do more to address their concerns. Thanedar says a more bipartisan drafting process would increase the chances of creating a supermajority coalition needed to pass the legislation. He argues that the current version of the bill has already been shaped by Republican input.
Republicans made 126 substantive changes requested by Democrats ahead of Tuesday’s vote. Those changes include tighter restrictions on public officials profiting from crypto ventures and giving state attorneys general a role in enforcing ethics provisions. The amendments were designed to build support among Democrats who have raised concerns about the bill’s scope.
Thanedar’s Position
Thanedar’s position is straightforward. He believes that more collaboration between the two parties would produce a bill that can attract enough votes to overcome the Senate’s supermajority requirement. Building a coalition that crosses party lines is essential.
He has argued that the drafting process should involve more input from Democrats, and he has said that the current version of the bill reflects that effort. His support for the bill in its current form is notable because he represents a district that includes some of the largest cryptocurrency companies in the country.
The 126 substantive changes requested by Democrats suggest that the drafting process has been extensive. The changes include:
- Tighter restrictions on public officials profiting from crypto ventures
- Giving state attorneys general a role in enforcing ethics provisions
- Other provisions aimed at addressing Democratic concerns
Chassé’s Warning
Chassé’s warning is blunt. She told the paper that the issue is now about Trump’s crypto holdings six weeks before an election. She argues that the text as written is unlikely to survive that referendum.
Her argument rests on the political calculus facing both parties. With an election looming, lawmakers are wary of voting on a bill that could become a campaign issue. Trump reported at least $1.4 billion in crypto earnings for 2025 in his annual financial disclosure, which has made his crypto investments a central topic in Washington.
Chassé’s position is also practical. She has told the paper that the industry “should stop dying on that hill” regarding ethics and points to stablecoin rewards as another potential fault line. She argues that the bill’s supporters need to accept that the current text is unlikely to pass and that the industry should focus on what it can live with.
What Chassé Wants to See
Chassé has offered a specific vision for what she thinks the bill should contain. She suggests that “some kind of cap or circuit breaker on yield” would likely be required to win over “the bank-side senators and a chunk of Democrats.” She also points to the need for “tighter illicit finance and state enforcement language.”
Her proposal is a compromise position. She acknowledges that the industry cannot get everything it wants, but she believes that targeted concessions could secure the votes needed to pass the bill. The idea of a cap or circuit breaker on yield is designed to address concerns about stablecoin rewards.
Chassé’s approach is tactical. She is not arguing that the bill should be abandoned, but she is arguing that its supporters need to be flexible. The industry has been fighting for regulatory clarity for years, and she sees the CLARITY Act as the best chance to get it.
She also recognizes that the bill’s opponents are not going to change their minds. She has told the paper that the industry should be reluctant to trade away self-custody and developer protections, which are central to the sector’s operations. Those protections are non-negotiable, in her view.
The Regulatory Landscape
The SEC and CFTC have demonstrated commitment to reducing uncertainty through guidance, rulemaking, no-action relief and exemptions. Those tools allow the agencies to adapt quickly to new developments in the market.
But agency action is not the same as getting CLARITY over the finish line. Regulatory guidance can be swept out with administrations, while legislation is harder to unwind. That permanence is what makes the bill attractive to some and threatening to others.
The Agency Agenda
Eagan says the SEC and CFTC have demonstrated commitment to reducing uncertainty through guidance, rulemaking, no-action relief and exemptions. She adds that CCI expects agencies’ crypto agenda to proceed in robust fashion regardless of the CLARITY Act, noting GENIUS Act implementation continues at Treasury and the banking regulators.
The GENIUS Act is a separate piece of legislation. Its implementation is ongoing, and it is likely to shape the regulatory landscape regardless of what happens with CLARITY. The fact that the agencies are moving forward on multiple fronts means that the industry is not waiting for Congress to act.
The SEC and CFTC have been issuing guidance and rules at a steady pace. They have been working on no-action relief and exemptions, which provide clarity to companies operating in uncertain areas. These tools allow the agencies to address specific problems without waiting for comprehensive legislation.
The agencies’ actions are part of a broader trend. The regulatory environment for digital assets is becoming more settled, and the industry is adapting to it.
The Political Calculus
The midterms are six weeks away, and the CLARITY Act has already failed. The question now is whether the bill can be salvaged before the election.
Democrats want more restrictions on the President’s ability to profit from office. Republicans have already made 126 substantive changes to address those concerns. The question is whether that is enough.
Chassé’s warning is a warning to both sides. The text as written is unlikely to survive the referendum, and the industry needs to decide what it can live with. The bill’s supporters need to be flexible, and the industry needs to be willing to make concessions.
The path forward is narrow. The bill needs a supermajority coalition, and that coalition needs to be built through bipartisan drafting. The 126 substantive changes requested by Democrats are a start, but they may not be enough.
The election is the deadline. The industry cannot afford to die on this hill, and neither can the bill’s supporters. The question is whether they can find common ground before the clock runs out.
Where the paper stands
The paper backs Congressman Thanedar’s push for bipartisan drafting and is against Kirsten Chassé’s claim that the bill cannot survive a referendum on Trump’s crypto holdings. Thanedar’s approach aims to build a supermajority coalition across party lines, while Chassé argues the text as written is too fragile to withstand political scrutiny. The paper supports the small business against both the agency and the giant, and it opposes rules that raise the cost of entry for small firms; the CLARITY Act, as drafted, appears to do precisely that.
Chassé’s warning that the fight is now about Trump’s crypto holdings six weeks before an election reflects a broader problem: regulation that targets the biggest players and leaves the rest exposed. The paper wants oversight narrow and aimed at the harm, not a broad new rulebook written by the industry’s top lobbyist.
What the reader should watch for is whether the drafting process remains open to genuine input from both parties, or whether it becomes a closed negotiation between insiders. The midterms are the deadline, and the bill’s supporters need to find common ground before the clock runs out.
Get the Notebook.
The day's best stories and every fresh verdict, in plain English, in your inbox by seven. One email a day, no more.