Author: Zennon Kapron, Forbes

Translation: Saoirse, Foresight News

Even before the election, the "CLARITY Act" was already struggling. Now, with the Democrats sweeping both houses in the midterm elections, the prospects of saving this cryptocurrency market bill before the new Congress takes office seem very bleak.

On September 15, the Senate initiated a motion to end debate on House Bill No. 3633 — the "CLARITY Act" (Digital Asset Market Clarity Act). The result was 49 votes in favor and 50 votes against, falling 11 votes short of the 60-vote threshold required. The bill was never able to reach a final substantive vote. However, Senator Thom Tillis submitted a motion for reconsideration on the day of the vote, allowing the bill to remain procedural, but there has been no substantial progress since.

The Democrats will control both houses of the new Congress opening on January 3, 2027, so there is virtually no willingness to cooperate with the Republicans to push the current version of the bill during this "lame-duck session." Before the 119th Congress adjourns, the bill theoretically has two remaining paths: lawmakers could negotiate to amend the text and resubmit it for a Senate vote; or attach cryptocurrency market regulation provisions to some must-pass legislation in December. However, the likelihood of either path materializing is very low.

(Note: "Lame-duck session" refers to the legislative period of the U.S. Congress after the election and before the new lawmakers are sworn in on January 3; if Congress chooses to adjourn after the election, the lame-duck session does not take place.)

11 Votes Short of Passage for the "CLARITY Act"

The reality behind this recorded vote is far more severe than the headline stating "just one vote short." All 49 votes in favor came from Republican lawmakers; the 50 votes against comprised all Democratic lawmakers present, two independent lawmakers, and four Republican senators: Susan Collins (Maine), Josh Hawley (Missouri), Jerry Moran (Kansas), and Thom Tillis (North Carolina). Democratic Senator Christopher Coons from Delaware was absent for the vote. Even if Coons had voted in favor and all four of the dissenting Republicans switched to support, the total would still only be 54 votes, still falling 6 votes short of the threshold. To initiate the motion to end debate, the bill must gain support from the Democratic camp that previously voted against it.

The House had passed the bill on July 17, 2025, with 294 votes in favor and 134 against. At that time, the Senate Banking Committee, chaired by Tim Scott, also released an alternative version on June 1. A summary of the bill from the Congressional Research Service outlined the core compromise of this proposal: the Commodity Futures Trading Commission (CFTC) would act as the primary regulatory body, responsible for "digital commodities" and the corresponding trading platforms, while the SEC (Securities and Exchange Commission) would retain clear regulatory authority. The jurisdictional division between the two agencies and the ethical provisions added by the Senate became the core points of contention in the debate.

In a committee statement on September 15, Tim Scott said that the vast majority of Republican senators voted for the bill to move forward, "the motion ultimately failed due to the Senate Democrats." He believes that before Congress completes its legislation, the SEC and CFTC should first establish clear regulatory rules for the digital asset sector. Democratic Chief Senator of the Senate Banking Committee Elizabeth Warren called for a vote against it that day. She acknowledged the feasibility of a bipartisan effort to develop cryptocurrency regulatory legislation but stated that "it should not be the current version," asserting that this bill would pose significant risks to ordinary families, the U.S. economy, and national security.

Regulatory Rules for Stablecoins Are Still Advancing

The setback in the September vote does not mean that the cryptocurrency industry is entirely out of reach of federal regulatory legislation. Payment-type stablecoins already have the "GENIUS Bill" as support, and the Office of the Comptroller of the Currency (OCC) is also drafting regulations for stablecoin issuing institutions, as reported by GL Insight last month regarding the final rule. The "CLARITY Act" focuses on another set of market structural issues: legal classification of various tokens, exchange regulation, and the boundaries of responsibility between the SEC and the CFTC. This part remains unresolved following the failed motion to end debate.

The Midterm Elections Reduced the Likelihood of Reaching an Agreement in December

The Democrats will take over both houses on January 1 next year. CNBC calculated on November 9 that the Democrats secured at least 255 seats out of 435 in the House, with the Senate potentially reaching up to 56 seats. These are only estimates and not the final counted results. As of the afternoon of November 10, 270toWin reported that there have been 7 Senate seats that have changed party control, including Texas, Ohio, Kansas, and Maine; two districts are still counting votes: in Alaska, Democratic candidate Mary Peltola is facing Republican Senator Dan Sullivan, with ranked-choice counting set to begin on November 18; in Mississippi, Democratic candidate Scott Colom is currently leading Republican Senator Cindy Hyde-Smith. The House also has 19 districts with undecided results, with some Louisiana seats awaiting a runoff in December. However, slight changes in counting results will not affect the division of control of the two houses.

However, the election results truly changed the negotiation dynamics in the upcoming six weeks. Even after the disappointment in the September vote, the Senate Republican majority, which still held the Banking Committee during the "lame-duck session," had a chance to push the bill again. But the soon-to-governing Democrats can simply wait until January to draft a new bill themselves. CNBC's post-election analysis pointed out that the Democrats will "almost have no incentive to compromise" before the new Congress members are sworn in.

CNBC reported that Republican Susan Collins, who voted against the bill, has already lost to Democratic candidate Troy Jackson in this election. This is bad news for the possibility of a renewed motion to end debate in December; the new Democratic seats in the Senate will only increase.

Time for Remaining Legislative Activity in Congress is Quite Tight

The tentative schedule for the Senate in 2026 is as follows: off November 11–13 for Veterans Day; off November 23–27 for Thanksgiving; off December 21–31. The federal government funding authorization will expire on December 11, and both a short-term continuing resolution and a complete annual appropriations bill will need to garner 60 votes in the Senate for support.

CNBC notes that the House passed the "Defense Authorization Act" in July, but the Senate Democrats subsequently rejected the Senate version. Senate Minority Leader Chuck Schumer stated that if the president "continues to drag America deeper into conflict with Iran," the Democrats will not allow the bill to pass. The report also mentioned that Secretary of Defense Pete Hegseth will face impeachment votes.

A market structural bill that has already failed in the motion to end debate does not rank high on the priority list compared to government appropriations and the annual defense authorization bill. Theoretically, it could be included as an add-on in such must-pass bills, but currently no lawmakers have publicly proposed this plan; and the Democratic caucus that the bill relies upon for passage has just gained the initiative to draft regulatory proposals in January.

Only Two Feasible Paths Remain During the "Lame-Duck Session"

The first path involves using Thom Tillis's motion for reconsideration. With this motion, the Senate can directly vote again on the motion to end debate from September 15 without starting the process from scratch. However, the vote gap remains, needing an additional 11 votes in favor, and most of the new votes would need to come from the Democrats who previously voted against it or by presenting a revised version that Democrats can accept. Elizabeth Warren has expressed her welcome for Republicans to come to the negotiating table to jointly draft a genuine bipartisan cryptocurrency bill. If the new version expands the SEC's authority and improves the ethical provisions that she believes are flawed, it might garner some opposing votes, but this would also require amending the official text already passed by the House.

The second path is to include the agreed-upon contents of the bill into the December appropriations bill or the final version of the "Defense Authorization Bill." Whenever the risk of government shutdown approaches, such rigid bills often bundle various additional issues. But the Democrats only need to wait another six weeks to set their regulatory rules independently. The Republicans’ effort to push for an end to debate still relies on Democratic votes, and the Republicans have already confirmed they will lose control over the new Senate.

Both paths are feasible within the Senate’s procedural rules, but the reality is fraught with uncertainties. If neither path is successful, the outcome is very clear: According to the 20th Amendment of the U.S. Constitution, at noon on January 3, 2027, the 119th Congress will officially adjourn, and all pending bills will become invalid. House Bill No. 3633, the Senate committee's alternative bill, and Tillis's motion for reconsideration will all be voided. Lawmakers must resubmit the bill in the 120th Congress and send it for committee review, drafting an entirely new regulatory text for the cryptocurrency market.

The Democrats May Draft a Cryptocurrency Bill with Different Approaches

Reports following the election have already outlined the general direction of a new bill. On November 4, reporter Eleanor Terrett revealed internal discussions among House Democrats: they plan to expand the amendment proposed by Representative Maxine Waters during the 2025 review of the "CLARITY Act" — the "Cryptocurrency Investor and Consumer Rights Act" — into a broader market structural bill in the new Congress; the new bill will expand the SEC's authority and correspondingly compress the regulatory space of the CFTC. This information is only from media disclosed internal discussions and not official bill text, but it closely aligns with Elizabeth Warren's position in September and corresponds to the Democrats’ imminent takeover of related committees.

Elizabeth Warren is currently the Democratic chief senator on the Senate Banking Committee; once the Democrats control the Senate, she is expected to assume the committee chair, although personnel arrangements have yet to be finalized. The chair of the House Financial Services Committee will also be held by a Democrat. The new bill will be revised under the leadership of these two committees, no longer led by Tim Scott. Unless Congress makes other adjustments, the "GENIUS Bill" remains the effective law in the stablecoin sector. The core subsequent negotiations will still revolve around token classification, exchange regulation, and which federal agency holds the primary regulatory authority.

Three Key Areas to Watch Before January 3

1. Whether to arrange a new round of voting to end debate, release a revised bill text to the public, or attempt to attach cryptocurrency market regulatory provisions to the appropriations bill due on December 11 or the "Defense Authorization Bill";
2. In Alaska, Mississippi, and the remaining House districts where votes are still being counted, changes in counting results will only affect the extent of the Democratic seat advantage and will not shake party control;
3. The new chair candidates for the Senate Banking Committee and the House Financial Services Committee, with the bill rewriting work to be led by these two officials.

Unless one of the first type of situations arises, the "CLARITY Act" as a legislative project for 2026 is essentially coming to an end. The bill lost in September by a vote of 49:50, and the midterm elections handed over the new Congress to the party that largely voted against it. This current "lame-duck session" is constrained by the deadline for appropriations and the defense bill schedule, leaving very little legislative window. Although theoretically there is still room for reconsideration and bundling legislation, as of November 12, no relevant movements have been observed.

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