Where Next for the CLARITY Act After a Week That Left it On the Brink?

Understanding the CLARITY bill's Senate rewrite, and how to keep tabs on the “market structure” narrative that could impact listed crypto products.

A Week of Unclarity

How worried should we be about the latest developments surrounding the CLARITY Act, amid a crypto-native backlash that calls the updated proposals “regulatory capture”?

Recent twists and turns in the progress of the Digital Asset Market Clarity (CLARITY) Act have turned what was already a complex policy process into something even seasoned market participants may struggle to keep track of: multiple committees, overlapping drafts, fast-moving amendments, and media shorthand that blurs distinct legislative texts.

Not to mention that, in fact, the overarching process comprises of separate House and Senate “market structure” efforts.

Here, we will get caught up on where things stand for ‘CLARITY’ after last week’s rancor. We’ll also unpick the differences between the currently bifurcated House and Senate proposals, before explaining how they’re expected to converge in practice.

What’s driving the controversy?

First, a quick summary of how we got here – ‘here’ being a stalemate on Capitol Hill after some of highest profile voices in the space gave the current incarnation of the CLARITY Act an unequivocal thumbs down.

Even without adjudicating every claim, it's clear objections are clustering around: (1) economic rights (what activities are permitted), (2) regulatory perimeter (which venues fall in-scope), and (3) agency balance (SEC vs CFTC).

These themes overlay three major points of contention:

• Stablecoin rewards / yield-like features.
  How stablecoin ‘rewards’ – more specifically yield limits – will be finessed - if yields are permitted at all, is one of the most concrete issues, with banks arguing the structure could accelerate deposit flight, while crypto firms argue restrictions are anticompetitive.
• Tokenized equities / tokenized real-world assets (RWAs).
  The concern that draft language could function as a de facto constraint on tokenized equities has been among the most directly cited criticisms to have emerged following the most recent Senate episode.
• DeFi scope and privacy.
  Claims that the evolving drafts could expand obligations in ways that are incompatible with open-source, non-custodial (decentralized) architectures—is one reason for the continued widespread “control vs permissionless” framing.

When Two Bills Collide

When an already potentially controversial bill enters the legislative process in one house, and then discussion proceeds to the other, this is an inevitable, classic – and perhaps even necessary – recipe for disputes. Those who could use a micro-recap of the CLARITY bill and clear attributions of key pillars to the branch of their origin, read on below.

The ‘Original’ CLARITY Act

The House version is H.R. 3633, the Digital Asset Market Clarity Act of 2025, introduced May 29th, 2025, and designed to establish a federal framework for “digital commodities” and related intermediaries. The House passed it on July 17, 2025, by 294–134.

The Senate’s ‘CLARITY Act’

In parallel, the Senate Banking Committee has been driving its own market-structure text—commonly referred to as the “Responsible Financial Innovation Act of 2025” in discussion-draft form—covering issues under the committee’s jurisdiction – i.e., its SEC-facing architecture. (Here’s Jones Day’s concise summary from September.)

Senate Banking leadership has also been publicly setting the expectation of moving a “market structure” product through markup, even if the timing has slipped (Reuters).

CLARITY Confusion

For less involved observers, the frequent tendency of some news reports to conflate the two drafts has been one source of confusion – though doing so is not entirely unreasonable.

The Senate’s market-structure process is commonly labelled – e.g., by Reuters, here – as the ‘CLARITY bill’ as if it’s identical to the House’s actual “CLARITY” bill. This is fair enough, given that the Senate is materially using the House vehicle as the procedural ‘shell’ while substituting Senate-negotiated text in markup.

So: there are genuinely distinct texts in play, but as is typical, the houses are attempting to converge on a single legislative outcome.

House vs. Senate CLARITY

Useful frames to help differentiate:

Asset Taxonomy - What’s Being Regulated

• House CLARITY: centers on “digital commodities” as a primary category.
• Senate Banking draft: introduces “ancillary assets” as a distinct construct and builds SEC-jurisdiction mechanics around that concept.

SEC vs. CFTC Oversight

• The House bill is widely characterized as giving the CFTC a larger footprint over spot markets for the relevant category (via the digital-commodity framing).
• Senate Banking’s work product is, by design, the Banking Committee’s SEC-facing portion; separate Senate Agriculture Committee work is expected/required to complete the CFTC-facing half.

‘Investment contract’ interpretations
Policy trackers also highlight that the two texts take materially different routes: the Senate draft leans into SEC rulemaking (adjacent to the reasoning reflected in the Howey test) to define “investment contract,” while the House CLARITY Act introduces an “investment contract asset” concept alongside other tests (e.g., network maturity).

CLARITY Delayed

The key development in the recent week of controversy (the week beginning January 12th) was procedural, but still consequential: it resulted in the schedule for Senate action slipping.

As rightly contextualized by Reuters, the Senate Banking Committee delayed a long-awaited discussion/markup after Coinbase’s CEO, Brian Armstrong opposed the bill’s current form, adding uncertainty to near-term momentum.

Cold Feet?

There was also a palpable drop off in near-term bipartisan support, with an acknowledgement that the amount of likely votes in favor was insufficient to support an accelerated timetable for CLARITY.

A planned mark-up by the Senate Agriculture Committee was delayed till late January.

The upside from this closer examination is a downplaying of the notion that delays have anything to do with ‘cold feet’, due to crypto winter fears, etc.

Instead, delays look more based on lawmakers’ perceived need for coalition maintenance—particularly where the texts touch on stablecoin economics, DeFi perimeter questions, and political optics.

What’s Next?

Our view of where this goes next as of January 15, 2026 – based solely on public statements, committee scheduling – follows.

Most Likely: Pause, Renegotiate, Proceed:

• Senate Banking leadership has publicly framed the process as ongoing good-faith negotiation.
• Meaningful industry signal still points to passage, even if the text is imperfect (e.g., Kraken’s Arjun Sethi, Ripple’s Brad Garlinghouse, and others).
  This scenario implies: a rescheduled Banking session; and some narrowing amendments (especially on stablecoin rewards, tokenization) which could keep enough pro-crypto Democrats onside to move the draft out of committee.

Moderate Risk: Bill Survives, but Delay Goes Chronic

Perhaps though, while the impasse isn’t terminal, procedural factors and the wider schedule could make it self-reinforcing:

• Sources told Decrypt the Senate Agriculture markup (now penciled in for January 27th) could slip if Banking can’t settle its lane first.
• This scenario implies: a longer rewrite cycle, possible rebranding/vehicle shifts, and a rising probability that “market structure” becomes a late-2026 push—or slides into the next Congress.

Tail risk: Delay Terminal in 2026

This is the risk that legislation fails to advance in any meaningful way in this cycle:

• If fractured industry unity becomes entrenched enough to keep the path forward uncertain for a protracted time.
• If the political economy creates multiple veto points: banks vs. crypto on deposit-sensitive stablecoin yield; agency turf; DeFi perimeter.
• What this scenario implies: leadership deprioritizes, stakeholders harden, and “better to do nothing than pass a bad bill” becomes the dominant equilibrium until after the midterms.

What to watch

• Potential emergence of a new Banking markup date that actually holds.
• Whether the Jan 27 Agriculture timeline remains viable or also slips.
• Visible détente on stablecoin rewards/yield language
• Public re-alignment of the coalition (Coinbase, other major issuers, and key Hill Democrats converging on a common “minimum viable” text).

Why this matters for Institutional Crypto

For institutional allocators and product sponsors, the most actionable angle remains whether the U.S. is converging on a regime that enables scaled, compliant market infrastructure:

• Regulatory legibility: clearer classification and venue oversight reduces due-diligence friction for exchanges, custodians, administrators, and ETP issuers evaluating U.S. product expansion.
• Product breadth: Treatment of tokenized securities/RWAs, stablecoin economics, and the DeFi perimeter will shape which market segments become “institutionalize-able” fastest (and, importantly, where benchmarks and reference rates can be embedded into regulated wrappers).
• Timeline realism: with markups slipping and committee jurisdiction needing reconciliation, the nearer-term base case is continued policy path dependence—draft-to-draft changes that market participants must track with version control discipline – while deprioritizing the headlines.