to leave a comment.
▲ United States, Bitcoin (BTC), Ethereum (ETH), XRP (XRP)/AI generated image ©
The Clarity Act, which was expected to change the regulatory landscape of the US cryptocurrency market, was shipwrecked in a key vote, but the movement towards regulatory clarity has not stopped. With the next legislative opportunity pushed back until after the November midterm elections, the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are pursuing their own regulatory frameworks independently of Congress, shifting the market's focus from 'bill passage' to 'who and how will fill the regulatory void'.
According to the investment media outlet The Motley Fool on September 19 (local time), the US cryptocurrency market structure bill, the Clarity Act, failed to pass a Senate cloture vote on September 15. The bill aimed to establish the first federal-level market structure rules for the cryptocurrency market and delineate the supervisory powers of the SEC and CFTC. In the 24 hours following the vote's failure, XRP (Ripple) fell by 8.5%, Ethereum (ETH) by 2.9%, and Solana (SOL) by 3.3%. However, the outlet analyzed that the sell-off has not been severe so far, and regulatory agencies are independently preparing some of the policies that the bill sought to advance.
The bill's next opportunity could be the lame-duck session, which runs from after the November 3 midterm elections until January of next year. However, whether a re-vote will actually occur is uncertain. Senator Cynthia Lummis, a prominent supporter of the bill, previously stated that if the cloture vote failed, "it's over." Decentralized prediction market Polymarket reflected a 7% chance that the Clarity Act would be enacted into law by 2026 on September 16. Ahead of the vote, Republicans proposed amendments reflecting Democratic demands, but Democrats argued that the ethics regulations were insufficient to address profit issues from cryptocurrency businesses linked to President Donald Trump and his family. Republican Senators Susan Collins, Josh Hawley, and Jerry Moran also voted against the bill.
With congressional legislation stalled, the SEC and CFTC have emerged as the entities to fill the regulatory void. Ripple CEO Brad Garlinghouse stated after the vote that the two agencies would pursue some of the content that the Clarity Act sought to establish as law through new policies. On August 18, the SEC proposed the 'Regulation Crypto Assets (RCA)'. According to SEC Commissioner Mark Uyeda, this proposal allows crypto startups to raise up to $5 million over four years without full securities registration and includes a safe harbor provision where tokens may not be treated as securities once the issuer completes promised development work and management activities to increase token value. CFTC Chairman Michael Selig also instructed his staff on August 20 to review cryptocurrency market rules using existing authorities.
The key issue is the 'sustainability' of regulation. Unlike laws enacted by Congress, SEC and CFTC rules can be relatively easily amended if the composition of the commissions changes in the future. Nevertheless, the media's analysis suggests that formalizing the rules applicable to the industry could be more advantageous for long-term business planning than 'regulation by enforcement,' which the cryptocurrency industry has criticized. Banks and asset management firms also need to ascertain which regulations apply before launching products like cryptocurrency exchange-traded funds (ETFs), so clearer rules could help attract institutional funds. In this process, XRP, Ethereum, and Solana were mentioned as potential primary targets for fund inflows.
Ultimately, the media's assessment is that the rejection of the Clarity Act does not mean a halt to the overhaul of US cryptocurrency regulation itself. While there remains a possibility that the current or next Congress could re-pursue the Clarity Act or similar legislation, for now, the key variable is the extent to which the SEC and CFTC will provide regulatory clarity using their own authority. The Motley Fool evaluated that this rejection does not need to be interpreted as a new or significant negative factor for the cryptocurrency market, given that the passage of the Clarity Act was anticipated to be difficult from the outset.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
Newsletter
Get key news delivered to your email every morning
to leave a comment.