The U.S. crypto industry entered 2026 with growing confidence that long-awaited market structure legislation was finally within reach. Now, that opportunity may be slipping away.<\/p>\n\n\n\n
The Digital Asset Market Clarity Act, better known as the CLARITY Act, spent much of the year building bipartisan momentum. It survived committee negotiations, received backing from the Trump administration and became one of the crypto industry’s biggest lobbying priorities.<\/p>\n\n\n\n
But Congress left for its August recess without putting the bill to a vote.<\/p>\n\n\n\n
That delay matters because the political landscape could look very different after the 2026 midterm elections.<\/p>\n\n\n\n
Prediction market Kalshi currently places the probability of Democrats winning control of the House at around 84%. If that happens, Democratic lawmakers could take over the committees responsible for writing and advancing digital asset legislation.<\/p>\n\n\n\n
Three names matter in particular: Maxine Waters, Shontel Brown and Elizabeth Warren<\/strong>.<\/p>\n\n\n\n If Democrats gain enough power, these lawmakers could become some of the most influential people determining the future of U.S. crypto regulation. Their previous positions suggest the industry’s preferred version of the CLARITY Act would face a much tougher path.<\/p>\n\n\n\n The CLARITY Act is designed to answer one of the biggest unresolved questions in U.S. crypto regulation: when is a digital asset a security, and when is it a commodity?<\/p>\n\n\n\n The legislation would divide oversight responsibilities between the Securities and Exchange Commission and the Commodity Futures Trading Commission.<\/p>\n\n\n\n It would also establish registration pathways for digital asset exchanges and provide certain safe harbors for token projects that meet disclosure requirements.<\/p>\n\n\n\n For crypto companies, these provisions could replace years of regulatory uncertainty with a clearer national framework.<\/p>\n\n\n\n Today, the SEC can use the Howey test, a legal standard dating back to 1946, when deciding whether a token should be treated as a security. At the same time, the CFTC oversees commodities but has more limited authority over spot markets.<\/p>\n\n\n\n Crypto firms must also navigate individual state regulations, creating an expensive and complicated compliance environment.<\/p>\n\n\n\n Supporters of the CLARITY Act believe clearer rules could encourage larger financial institutions to expand into digital assets.<\/p>\n\n\n\n Charles Schwab, which oversees about $13 trillion in client assets, has described the CLARITY Act as a key catalyst for its digital asset strategy. The firm has also said that around 20% of its customers either hold crypto or have expressed interest in gaining exposure.<\/p>\n\n\n\n Opponents, however, worry that the legislation could reduce investor protections and give crypto companies exemptions that traditional financial firms do not receive.<\/p>\n\n\n\n That disagreement could become even more important if Democrats regain control of key congressional committees.<\/p>\n\n\n\n Representative Maxine Waters is one of the most important figures to watch.<\/p>\n\n\n\n If Democrats take control of the House, Waters would be positioned to once again lead the House Financial Services Committee.<\/p>\n\n\n\n She previously chaired the committee between 2019 and 2023 and built a reputation for focusing heavily on consumer protection, fair lending and stronger oversight of financial institutions.<\/p>\n\n\n\n Her record on crypto is more complicated than simply being supportive or opposed.<\/p>\n\n\n\n Waters was one of the strongest critics of Facebook’s Libra project in 2019. She questioned whether a major technology company should be allowed to create a global payment system and raised concerns about consumer protection, privacy and financial stability.<\/p>\n\n\n\n However, Waters has also shown that she is willing to negotiate on crypto legislation.<\/p>\n\n\n\n In 2022, she held extensive discussions with Republican lawmaker Patrick McHenry over a potential stablecoin bill. The negotiations ultimately broke down, but they demonstrated that Waters is not necessarily opposed to creating rules for digital assets.<\/p>\n\n\n\n Her priorities are simply different from those of many crypto companies.<\/p>\n\n\n\n Under Waters, the CLARITY Act could face demands for stronger disclosure requirements, tougher enforcement provisions and fewer protections for token issuers.<\/p>\n\n\n\n That could dramatically change the legislation even if she does not attempt to block it outright.<\/p>\n\n\n\n The bigger challenge may be time.<\/p>\n\n\n\n A new version of the bill could require months of hearings, negotiations and committee work. If lawmakers had to effectively restart the process in 2027, comprehensive crypto legislation could easily be pushed much further into the next Congress.<\/p>\n\n\n\n Representative Shontel Brown is another lawmaker who could have considerable influence over the future of crypto legislation.<\/p>\n\n\n\n Her role comes through the House Agriculture Committee.<\/p>\n\n\n\n Although the committee’s name might make its connection to crypto seem unusual, it oversees the CFTC. That gives it an essential role in legislation that would expand the regulator’s authority over digital asset commodities.<\/p>\n\n\n\n If Democrats take the House, Brown is positioned to lead the committee.<\/p>\n\n\n\n Her crypto voting record is more limited than Waters’, but she voted against FIT21, an earlier market structure bill that helped lay the groundwork for the CLARITY Act.<\/p>\n\n\n\n She has also not made digital asset legislation a major policy priority.<\/p>\n\n\n\n That could create a different problem for the industry.<\/p>\n\n\n\n Brown would not necessarily need to launch an aggressive campaign against the CLARITY Act. Simply choosing not to prioritize it could be enough to stall progress.<\/p>\n\n\n\n Comprehensive crypto market structure legislation needs both the Financial Services Committee and Agriculture Committee to move together because the framework divides authority between the SEC and CFTC.<\/p>\n\n\n\n If one committee advances the bill while the other does not, the legislation could struggle to reach the House floor in a workable form.<\/p>\n\n\n\n That gives the Agriculture Committee chair significant influence over the timetable.<\/p>\n\n\n\n The most difficult scenario for the crypto industry could emerge if Democrats win both chambers of Congress.<\/p>\n\n\n\n In that situation, Senator Elizabeth Warren could be positioned to lead the Senate Banking Committee.<\/p>\n\n\n\n Warren has been one of Washington’s most prominent crypto critics for years.<\/p>\n\n\n\n She has pushed for stronger anti-money laundering requirements, increased regulatory oversight and stricter treatment of decentralized finance platforms and self-hosted wallets.<\/p>\n\n\n\n Her Digital Asset Anti-Money Laundering Act sought to apply extensive compliance requirements across parts of the crypto industry.<\/p>\n\n\n\n She has also repeatedly argued that digital assets can create opportunities for illicit finance and weaken consumer protections.<\/p>\n\n\n\n A Senate Banking Committee led by Warren would therefore be unlikely to support the existing CLARITY Act without major changes.<\/p>\n\n\n\n Several parts of the bill conflict directly with her previous policy positions, particularly provisions that limit SEC authority or give token issuers temporary regulatory protections.<\/p>\n\n\n\n A Warren-led committee would be more likely to strengthen regulatory oversight than reduce it.<\/p>\n\n\n\n Kalshi currently places the probability of Democrats gaining control of the Senate at roughly 47%, making that outcome much less certain than a Democratic House victory.<\/p>\n\n\n\n If Republicans keep the Senate, the industry may still have room to negotiate.<\/p>\n\n\n\n But Democratic control of both chambers could dramatically change the prospects for market structure legislation.<\/p>\n\n\n\n Some elements of the CLARITY Act would likely face more opposition than others under Democratic leadership.<\/p>\n\n\n\n One of the biggest targets could be the bill’s safe harbor provisions.<\/p>\n\n\n\n These protections allow qualifying token projects a period of time to develop before regulators make a final determination about their legal classification.<\/p>\n\n\n\n Supporters argue that this gives networks enough time to decentralize without immediately facing securities enforcement.<\/p>\n\n\n\n Critics see the same provision differently.<\/p>\n\n\n\n They argue that safe harbors could allow token issuers to raise money from retail investors while delaying the investor protections normally associated with securities offerings.<\/p>\n\n\n\n Both Waters and Warren have previously raised concerns about regulatory exemptions and safe harbor structures.<\/p>\n\n\n\n A Democratic rewrite of the legislation could therefore narrow these protections significantly or remove them altogether.<\/p>\n\n\n\n Another major debate involves the CFTC.<\/p>\n\n\n\n The CLARITY Act would give the agency clearer authority over digital asset commodities and spot markets.<\/p>\n\n\n\n The crypto industry has generally supported a larger CFTC role because the agency has historically taken a more commodity-focused approach to digital assets than the SEC.<\/p>\n\n\n\n Critics worry that expanding the CFTC’s responsibilities without giving it enough funding and enforcement resources could create gaps in oversight.<\/p>\n\n\n\n Warren has previously raised similar concerns and has favored keeping more digital assets within the stronger enforcement framework available to the SEC.<\/p>\n\n\n\n Under Democratic leadership, lawmakers could therefore reduce the CFTC’s expanded role or attach significantly stronger funding and enforcement requirements to it.<\/p>\n\n\n\n The CLARITY Act also creates a regulatory pathway for digital asset trading platforms.<\/p>\n\n\n\n For exchanges, having a dedicated registration framework would remove some of the uncertainty that has defined the U.S. market for years.<\/p>\n\n\n\n However, Democratic committee leaders could seek tougher standards.<\/p>\n\n\n\n Possible changes could include stronger market surveillance requirements, tighter rules around conflicts of interest and obligations closer to those followed by traditional securities exchanges.<\/p>\n\n\n\n This creates a difficult situation for the crypto industry.<\/p>\n\n\n\n Companies have spent years asking Washington for regulatory clarity. But clarity under much stricter rules may not be the type of framework the industry wants.<\/p>\n\n\n\n If a rewritten CLARITY Act imposes requirements that crypto companies consider more restrictive than the current system, some firms could decide that continuing to fight individual enforcement cases is preferable.<\/p>\n\n\n\n That tension sits at the center of the debate.<\/p>\n\n\n\n The industry wants clear rules, but the details of those rules matter just as much as having legislation in the first place.<\/p>\n\n\n\n Prediction market sentiment surrounding the CLARITY Act has weakened considerably.<\/p>\n\n\n\n Kalshi currently gives the legislation roughly a 16% chance of passing in 2026, compared with more than 60% around three months earlier.<\/p>\n\n\n\n Several developments appear to have contributed to the drop.<\/p>\n\n\n\n First, Congress failed to schedule a vote before the August recess.<\/p>\n\n\n\n That removed an important deadline supporters had hoped would create momentum.<\/p>\n\n\n\n Second, President Donald Trump’s own involvement in crypto businesses has complicated bipartisan negotiations. Democratic lawmakers have increasingly argued that industry-friendly legislation could financially benefit the president’s family.<\/p>\n\n\n\n Third, prediction markets have become more confident that Democrats will take control of the House.<\/p>\n\n\n\n Together, these developments have created a much narrower window for the industry’s preferred bill.<\/p>\n\n\n\n The 16% probability does not mean the legislation is formally dead.<\/p>\n\n\n\n Congress could still act after returning in September.<\/p>\n\n\n\n But if the current bill fails, any future version introduced under a different congressional majority could look substantially different.<\/p>\n\n\n\n Publicly, industry groups continue to support comprehensive federal crypto legislation.<\/p>\n\n\n\n Behind that push, however, the industry’s priorities appear to be shifting.<\/p>\n\n\n\n Blockchain Association CEO Summer Mersinger has acknowledged that the legislative window is becoming tighter and that the industry must prepare for the possibility that comprehensive legislation will not move as quickly as expected.<\/p>\n\n\n\n If the CLARITY Act fails, several alternative strategies remain available.<\/p>\n\n\n\n The industry could focus on narrower bills that attract stronger bipartisan support instead of trying to pass a comprehensive market structure package.<\/p>\n\n\n\n It could also increase lobbying efforts at the state level.<\/p>\n\n\n\n Another option would be continued litigation aimed at establishing favorable legal precedents around the classification of digital assets.<\/p>\n\n\n\n None of these alternatives offers the same level of certainty as comprehensive federal legislation.<\/p>\n\n\n\n State regulation can create a patchwork of different requirements.<\/p>\n\n\n\n Court battles can take years and their outcomes are difficult to predict.<\/p>\n\n\n\n Narrow bills may solve individual problems but leave the broader SEC-CFTC jurisdiction question unresolved.<\/p>\n\n\n\n One of the industry’s strongest arguments for passing federal legislation is that other major markets are already building their own regulatory frameworks.<\/p>\n\n\n\n The European Union’s Markets in Crypto-Assets framework has been operating since 2024.<\/p>\n\n\n\n Singapore, Japan and the United Kingdom have also moved forward with digital asset regulations.<\/p>\n\n\n\n Supporters of the CLARITY Act argue that continued delays in Washington could make the United States less attractive to companies looking for predictable regulatory environments.<\/p>\n\n\n\n If firms choose to build products, hire employees and allocate capital in countries with clearer rules, the competitive gap could widen over time.<\/p>\n\n\n\n That makes the next few months particularly important.<\/p>\n\n\n\n The first major signal will be whether congressional leaders schedule the CLARITY Act for a floor vote after lawmakers return from recess.<\/p>\n\n\n\n September 30 could become an important informal deadline. If the legislation has still not received a vote by then, its chances of passing before the midterm elections would become increasingly remote.<\/p>\n\n\n\n Prediction market odds surrounding House control will also be important.<\/p>\n\n\n\n If the probability of Democrats winning the House rises above 90%, markets would effectively be pricing in a very high likelihood that Waters and Brown take control of two important committees in January 2027.<\/p>\n\n\n\n The Senate remains another major uncertainty.<\/p>\n\n\n\n If Democrats gain control there as well, Warren’s comments about the Banking Committee’s priorities could provide an early indication of whether crypto market structure legislation has any realistic path forward.<\/p>\n\n\n\n Charles Schwab is another company worth watching.<\/p>\n\n\n\n The financial giant has publicly connected its digital asset expansion plans with regulatory progress. Any delay in those plans could strengthen the argument that major institutions are waiting for Washington before committing further resources.<\/p>\n\n\n\n Finally, an increase in state-level crypto legislation could indicate that the industry has started shifting lobbying resources away from Washington and toward local governments.<\/p>\n\n\n\n The CLARITY Act is not dead yet.<\/p>\n\n\n\n But the political window that made its current form possible may be closing rapidly.<\/p>\n\n\n\n If the bill fails before the balance of power in Congress changes, the crypto industry’s next attempt at comprehensive regulation could face a much different group of lawmakers\u2014and a much tougher set of negotiations.<\/p>\n\n\n\n <\/p>\n","protected":false},"excerpt":{"rendered":" The U.S. crypto industry entered 2026 with growing confidence that long-awaited market structure legislation was finally within reach. Now, that opportunity may be slipping away. The Digital Asset Market Clarity Act, better known as the CLARITY Act, spent much of the year building bipartisan momentum. It survived committee negotiations, received backing from the Trump administration…<\/p>\n","protected":false},"author":3,"featured_media":15993,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[63,70],"tags":[2086,526,65,368],"class_list":["post-15992","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-news","category-finance","tag-clarity-act","tag-congress","tag-crypto","tag-regulation"],"yoast_head":"\nWhy the CLARITY Act matters for crypto<\/h2>\n\n\n\n
Maxine Waters could reshape the House’s crypto agenda<\/h2>\n\n\n\n
Shontel Brown could control a critical part of the process<\/h2>\n\n\n\n
Elizabeth Warren could create an even bigger hurdle in the Senate<\/h2>\n\n\n\n
Safe harbors could be among the first provisions targeted<\/h2>\n\n\n\n
Expanded CFTC authority could face resistance<\/h2>\n\n\n\n
Crypto exchanges could face tougher requirements<\/h2>\n\n\n\n
Prediction markets are turning increasingly pessimistic<\/h2>\n\n\n\n
The crypto industry is already considering a Plan B<\/h2>\n\n\n\n
Global crypto regulation continues to move forward<\/h2>\n\n\n\n
What investors and the crypto industry should watch next<\/h2>\n\n\n\n