US Senate Crypto Market Structure Bill Faces Gridlock as Midterms Loom

With continued political deadlock, movement toward comprehensive U.S. digital asset market structure legislation appears to have been halted in the Senate according to industry experts in Washington. The Digital Asset Market Clarity Act (CLARITY Act) was passed by a large bipartisan vote in July of this year by the House of Representatives and sent to the Senate for reconciliation and to advance through the process; however, there are still many obstacles remaining before the mid-term elections on November 2026, such as an extended government shutdown, partisan disputes regarding ethical requirements for financial products, ongoing debate regarding whether stablecoins will earn an interest rate (yield) or receive other types of reward payments, and delays at committee levels.

The goal of The CLARITY Act is to provide significant regulatory clarity after many years of uncertainty over who governs the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). Furthermore, this legislation will end the practice of “regulating through enforcement,” Allow tokenized assets, establish meaningful consumer protections and provide protections against money laundering and other illicit activities while providing meaningful protections for businesses that are innovating. The White House and some Members of Congress believe that the CLARITY Act could lead to America becoming the "capital of crypto", however differences among lawmakers prevent a coordinated approach towards passage.

The House Passage and Senate Referral

On July 1, 2025, H.R. 3633—the CLARITY Act—was passed by a 294-134 vote by the House Of Representatives with strong bipartisanship support for the need to have an updated legal framework in place. The legislation provides clear definitions for digital assets by defining their scope (i.e., by defining “network tokens” as commodities vs. “ancillary assets” as securities) and establishing a framework through which mature blockchains could be treated for purposes of federal securities regulations and provides additional provisions regarding disclosures, secondary markets, and safe harbors.

The Senate received the legislation from the House of Representatives on September 18, 2025, and it was referred to the Senate Banking Committee, although portions of the bill would likely fall under the jurisdiction of the Agriculture Committee as well.

Senate Agriculture Committee Advances Commodities-Focused Version

The Digital Commodity Intermediaries Act, which the Senate Agriculture Committee, chaired by Senator John Boozman (R-AR), prepared in January 2026 to enhance CFTC authority over crypto spot markets and digital commodity intermediaries (including brokers, dealers and exchanges), was approved by a 12-11 vote — just shy of success in a party-line vote. Democrats withdrew support for the bill when they were unable to pass an amendment related to consumer protection, ethics and federal funding for crypto businesses. The committee has stated that they intend to continue negotiating in a bipartisan manner as they send this bill to the Senate floor, but the division across party lines was evident in the narrow margin of this vote.

Senate Banking Committee Delays and Ongoing Stalemate

The Senate Banking Committee, under the guidance of chairman Tim Scott (R-SC), has experienced challenging times this past week due to the markup scheduled for January 15, 2026, being delayed at the very last minute after the release of new draft language in early January.

Chairman Scott stated that, in light of ongoing “good faith” negotiations between Senators and the House, he agreed there were “significant concerns expressed by several large industry participants” regarding various parts of the bill, including stipulations regarding rewards for stablecoins. This decision came on the heels of substantial public opposition from numerous large companies (including Coinbase), who had raised concerns over these issues prior to the postponement.

The committee’s proposal includes providing a single set of rules for all securities, addressing the treatment of DeFi, clarifying the rules regarding stablecoins (which builds on a previous bill called the GENIUS Act), and preserving state authority in specific areas. However, there are still some unresolved issues within those categories:

1. Yield on stablecoin: There are ongoing discussions among Banks about whether or not providing incentives or interest on a stablecoin would negatively impact banks’ traditional savings and loan business.

1. Ethics and conflicts: There are disagreements between the parties over possible conflicts of interest.

1. DeFi and Tokenization: There remain open questions as to how decentralized protocols and tokenized assets would operate under this new law.

There have been ongoing, private discussions with participation from the White House [through the Crypto Council-hosted meetings] and informal deadlines that occurred this March 1, 2026, without any resolution. A Banking markup is currently being planned for mid-to-late March, but a definite date has not yet been established.

Gridlock Causes & Issues

There have many issues that have slowed progress on the gridlock:

1. Government Shutdown​ – The federal government was shut down longer than it had been at any other time in history, therefore causing Congress very serious disruption to operations as well as tremendous delays in passing legislation.

1. Partisan Divisions in Congress​ – Committees voted down amendments on a party-line basis that would have strengthened consumer protections, regulated all aspects of the ethics of members of Congress, and prevented any type of illegal financing system by prohibiting contributions from the public.

1. Support of the Industry Has Withdrawn​ – Many of the most well-known supporters of the industry, such as Coinbase, have withdrawn their support due to concerns about specific provisions of these bills. Without these major companies’ support, there will be significant uncertainty in the marketplace regarding these proposed regulations.

1. Midterm Elections​ – As we continue to move toward midterm elections scheduled for November 2026, the political environment surrounding election years creates distractions for lawmakers from passing these contentious bills and provides them with an opportunity to focus on re-election.

The bill has been referred to as “on hold” by observers such as Rebecca Liao (the CEO of Saga and a former adviser to Biden), undermining optimistic projections (e.g., Senator Bernie Moreno’s prediction in February that it would pass in April). According to analysts at JPMorgan, should the bill pass mid-year, it would create a “positive catalyst” for the markets by reducing uncertainty in enforcement and increasing institutional investment; however they caution that any delays in passing the bill could jeopardise the potential opportunity.

Broader Implications for the Crypto Industry

Verbal statements at this point simply give rise to further confusion; both houses passed separate regulations on their own in previous years (and if anything else is ever done with them, they'll likely have to go through this process yet again). Once again, we're stuck just waiting on someone in DC to decide how things are going to evolve before they happen (if they happen), while continuing to move forward with the status quo until somebody can finish finalizing all the details around implementing the new rules.

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Prospects Ahead

While some insiders remain hopeful for spring or mid-year action—potentially driven by White House pressure and industry lobbying—the path is narrow. A full Senate vote, reconciliation, and presidential signature would require breakthroughs on stablecoin yield, DeFi scope, and ethics. Absent compromise, the bill risks fading into election noise, delaying U.S. leadership in digital assets.

Numerous obstacles face the U.S. Senate as legislators continue promoting a comprehensive digital assets market structure bill, which builds off of the House-passed CLARITY Act. These barriers include possible governmental shutdowns, partisan divisions, and unresolved questions regarding stablecoin yield and ethics; thus, the Senate is making little progress on either legislative pathway at this time.

The Senate Agriculture Committee voted to move forward with its agriculture-oriented legislation, while the Banking Committee has not convened since for a previously scheduled markup in January, and both committees are presently awaiting congressional midterm elections to proceed with further action.

A lack of progress on such an important topic highlights the difficulties in creating new legislation, especially in an environment where there are many opposing viewpoints, and where there are economic consequences regardless of whether there is agreement or not. While the crypto-related industry continues to lack clear guidelines from its regulator(s), the ongoing negotiations indicate that consensus will likely be reached—assuming that the ideological divide between supporters and opponents is bridged before the political effects of the upcoming elections are felt.