CLARITY Act odds fall to new lows as Lummis pushes for passage

The CLARITY Act faces dwindling odds of becoming law this year as a dispute over ethics language stalls the crypto market structure bill.

The CLARITY Act, legislation that would establish the first comprehensive federal framework for digital asset regulation in the US, faces sharply reduced odds of passage this year as a dispute over ethics language stalls progress, Senator Cynthia Lummis said the bill remains critical for the industry.

"It's very important the CLARITY Act gets across the finish line," Lummis, a Wyoming Republican, said July 14. The bill would create clear rules for classifying digital assets and regulating stablecoins, addressing a regulatory gap that has pushed some crypto firms to operate overseas.

The Senate Banking Committee approved the bill 15-9 in May, with two Democrats crossing party lines to join Republicans. A House subcommittee has since advanced companion legislation. But the probability of enactment has dropped to new lows, according to betting markets, as disagreements among Democrats have fixed on an ethics provision tied to the president's personal financial holdings.

The ethics hurdle

The dispute centers on language requiring disclosure of personal crypto holdings by elected officials, with Democrats focused on the president's potential gains from digital asset investments. The provision has become a sticking point that threatens to unravel bipartisan support, according to people familiar with the negotiations.

The White House's top crypto advisor, Patrick McHenry — the former House Financial Services Committee chair who now serves as the administration's digital assets point person — has been working to broker a compromise. McHenry helped shepherd the Financial Innovation and Technology for the 21st Century Act through the House in 2024, a precursor to the current legislative push.

What's at stake

Without passage this year, the US risks falling further behind jurisdictions that have already enacted clear crypto rules. The European Union's Markets in Crypto-Assets regulation took full effect in 2025, providing a unified framework across 27 member states. Singapore, Hong Kong and the United Arab Emirates have also attracted crypto firms seeking regulatory clarity.

The CLARITY Act would designate the Commodity Futures Trading Commission as the primary regulator for digital commodities and grant the Securities and Exchange Commission authority over digital asset securities, with clear jurisdictional boundaries. The bill also includes consumer protection provisions and stablecoin reserve requirements.

Industry groups have urged lawmakers to resolve the ethics dispute quickly. The Blockchain Association and the Crypto Council for Innovation have both issued statements calling for passage, warning that continued uncertainty will drive talent and capital offshore.

The Senate is expected to take up the bill when it returns from recess, though the timeline remains uncertain. Lummis said she is working to secure the additional votes needed to overcome a potential filibuster.

This article is for informational purposes only and does not constitute investment advice.