Author: Zen, PANews
In late January 2026, the U.S. Senate Agriculture Committee passed the CLARITY Act, aimed at regulating the cryptocurrency market structure, with a narrow partisan majority of 12 votes to 11.
"This is an important step in establishing clear rules for the digital asset market," said Agriculture Committee Chairman, Republican John Boozman, expressing hope that this move would build momentum for advancing legislation within the Senate.
However, due to collective opposition from Democratic senators, the committee vote barely passed along strict party lines. As a result, many observers view it as a step with "limited substantive progress," and the bill's future prospects of becoming law remain highly uncertain.
Defining Digital Commodities and Establishing CFTC's Regulatory Role
The crypto market structure bill passed by the Senate Agriculture Committee aims to establish a comprehensive federal regulatory framework for the digital asset sector.
As Committee Chairman, Republican John Boozman, stated in his pre-session remarks, the U.S. Commodity Futures Trading Commission (CFTC) is the appropriate agency to oversee spot trading of digital commodities. At a macro level, this bill provides a clear definition of digital commodities, protects innovation and technology, establishes consumer protection safeguards, and provides the necessary resources for the agency to take on this new responsibility.
Defining "digital commodity" clearly and, on this basis, authorizing the CFTC to establish a regulatory mechanism for intermediaries in the spot market for digital commodities is the core content of the bill. The bill requires the CFTC and the SEC to develop coordinated rules for overlapping areas to avoid regulatory gaps or conflicts. This structure is seen by the industry as favoring the classification of more digital assets as commodities, thereby avoiding the stringent regulations of securities laws.
The bill proposes establishing a federal registration system for digital commodity exchanges and brokers, requiring relevant platforms to register with the CFTC and comply with regulatory requirements. Legislators hope this will encourage the compliant operation of digital asset trading markets within the U.S. while enhancing market liquidity and resilience. The CFTC will receive new funding sources to support the implementation of this spot market regulatory mechanism.
To strengthen investor protection and market integrity, the bill also establishes a series of investor protection measures, including customer fund segregation, conflict of interest prevention, and mandatory disclosure requirements. These provisions aim to prevent misconduct such as misappropriation of user assets by trading platforms and insider trading, thereby improving market transparency.
Additionally, the bill includes protective clauses for software developers and innovative technologies, intended to ensure that technological innovation activities such as open-source code writing and blockchain node operation are not unnecessarily restricted due to regulatory uncertainty.
Apart from the above bill content, Democrats also proposed three amendments during the review, including a "Digital Asset Ethics Act" restricting the issuance, sponsorship, or endorsement of digital asset-related activities by the President, Vice President, members of Congress, and candidates, as well as measures to combat "crypto ATM/kiosk" scams and prohibit federal bailouts for bankrupt crypto entities. However, all three amendments were rejected by Republicans.
From Months of Bipartisan Cooperation to Sudden Breakdown in Negotiations
Last November, building on the Digital Asset Market Transparency Act passed by the House in July, the U.S. Senate Agriculture Committee released a draft legislative proposal for regulating the cryptocurrency industry. This discussion draft, released by Boozman and Democratic Senator Cory Booker, was seen as a very meaningful and proactive development, despite many unresolved issues.
"From November last year-end, we worked nine-to-five every day, holding weeks of meetings with all stakeholders, gathering feedback and ideas together with the Boozman team," a Senate Democratic aide familiar with the matter told The Block, describing the Senate Agriculture Committee negotiations as originally a "very good bipartisan process." However, at the beginning of the new year, the situation changed drastically.
"We really felt very close to reaching a bipartisan agreement." This Democratic aide stated that in early January, the Boozman team suddenly informed them of a change in plans, writing a new draft of the bill without informing the Democrats and intending to begin deliberations on January 15th. The Boozman team indicated they had made sufficient revisions to the bill text and it was time for a vote. However, this bill overturned the results of months of bipartisan cooperation.
Despite the breakdown in collaboration, before the hearing, Democrats still tried to bring the Agriculture Committee Republicans back to the negotiating table to reach a bipartisan consensus before the formal vote. However, the final outcome of the negotiations was a vote along party lines. The bill will be submitted to the full Senate for consideration without Democratic support.
Democratic chief negotiator, New Jersey Federal Senator Cory Booker, attributed the shift in partisan stance during the negotiations to the Trump administration. He emphasized that Trump's personal involvement in the cryptocurrency领域 was a key obstacle to the final passage of the legislation.
Boozman stated that there were fundamental policy differences between the two sides. He also expressed continued commitment to working with Democrats to advance the bill for parliamentary consideration, adding that "we want a bipartisan bill."
However, in reality, the three key amendments proposed by Democrats showed no signs of cooperation or compromise. Ethical issues have always been the main sticking point preventing bipartisan cooperation. Democrats have been pushing to include clauses in the bill restricting political figures from participating in cryptocurrency businesses to avoid ongoing corruption by public officials. Such provisions, clearly targeting potential conflicts of interest for President Trump, were unlikely to gain widespread support and compromise from Republicans.
Besides the ethics clause, Democratic committee members also raised objections regarding DeFi regulation and the strength of consumer protection. They were concerned that the Republican draft lacked sufficient regulation in the DeFi领域, potentially allowing decentralized exchanges to operate outside regulatory oversight, thus leaving loopholes for money laundering and fraud.
Process Pushed Forward, But No Substantive Progress
"The U.S. needs to pass this bill quickly to avoid losing momentum under the current crypto-friendly administration." On January 21st, Patrick Witt, Executive Director of the President's Digital Asset Advisory Committee, tweeted on platform X in response to Coinbase CEO Brian Armstrong's withdrawal of support for the version of the crypto bill from the Senate Banking Committee.
"You might not like every part of the CLARITY Act, but I can guarantee you will dislike the future Democratic version even more." Witt believes that crypto legislation will inevitably be enacted, and if it passes after Democrats regain power, the final bill would be terrible, even worse than canceling the legislation altogether.
Therefore, Witt believes the current situation should be seized to act decisively and pass the legislation quickly. He stated that to get 60 votes in the Senate, some compromises are needed, "but don't let perfect be the enemy of good."
According to U.S. Senate legislative procedures, general bills require at least 60 votes to overcome a filibuster and pass. Currently, Republicans hold a slim majority with 53 seats in the Senate, meaning that even with unified support from all Republican senators, they would still need to secure at least 7 Democratic senators to cross the 60-vote threshold.
However, Democratic members of the Agriculture Committee have collectively voted against it and expressed strong objections publicly. This makes the committee-level passage more symbolic, with substantial legislative progress still very limited and core disputes unresolved.
At the hearing, Booker pointed out: "The White House has made this incredibly difficult. It is absurd that the U.S. President and his family have made billions of dollars from this industry while still trying to craft a framework without including ethics provisions that would prevent such serious corruption—this will undermine our democracy."
Democrats worry that without clear restrictions, the risk of high-level government officials "using their positions to profit from the crypto industry" will damage public trust. The senior Democratic representative organization Public Citizen even mockingly called the current version of the bill the "gryfto bill" (a play on "crypto" and "grift," implying profiteering under the guise of crypto), criticizing its failure to plug loopholes for potential profit transfers by the President and relatives.
Amid the firm opposition from Democratic senators, the bill's prospects in the full Senate became complex and bleak. From the current situation, without substantial bipartisan compromise, this crypto market structure bill is highly likely to encounter obstruction during a full Senate vote.
Furthermore, the companion legislation handled by the Senate Banking Committee remains stalled. Due to unresolved disputes over issues like stablecoin yields, and the greater urgency of housing legislation concerning people's livelihoods, the Banking Committee postponed the bill review originally scheduled for January and has not rescheduled it, potentially delaying it until the second quarter.
This means that even if the Agriculture Committee version barely enters full Senate discussion, a complete Senate version of the crypto legislation is still not formed. Subsequently, it may be necessary to merge and reconcile the versions from the two committees before aligning with the version passed by the House. If the Senate cannot reach agreement on a unified version promptly, the legislative timeline will be further extended.
The factor of time also fills the bill's future with variables. 2026 is a midterm election year for the U.S. Congress. Generally, the willingness and ability of Congress to pass major legislation decrease several months before an election year. If this crypto market structure bill cannot achieve a breakthrough in the first quarter of 2026, it may be squeezed out by the annual legislative agenda, thus missing the window of opportunity.
More critically, the November election could change the majority party control of the Senate. Some analysts point out that if Democrats regain control of the Senate after the election, this unfinished crypto legislation will likely face significant revisions or even shelving.
However, on the Democratic side, including Booker, some senators have indicated they are not entirely opposed to the bill itself. They emphasize that they are "willing to work to find common ground" as long as key ethical and protective clauses can be met. But if partisan opposition persists, its prospects are likely to grow dimmer as the election approaches.
