Behind the passage of the Clarity Act by the US Senate Agriculture Committee lies a bleak future.

Author: Zen, PANews

In late January 2026, the U.S. Senate Agriculture Committee passed the CLARITY Act, which aims to regulate the structure of the cryptocurrency market, by a narrow partisan majority of 12 to 11.

“This is an important step toward establishing clear rules for the digital asset market,” said John Boozman, chairman of the Agriculture Committee and a Republican, hoping the move would gain momentum for legislation in the Senate.

However, due to collective opposition from Democratic senators, the committee vote barely passed amidst strong partisan divisions. Therefore, many observers view it as a step with "limited substantive progress," and the future of the bill becoming law remains highly uncertain.

Define digital goods clearly and establish the CFTC's regulatory position.

The Crypto Markets Structure Act passed by the Senate Agriculture Committee aims to establish a comprehensive federal regulatory framework for the digital asset sector.

As Commission Chairman John Boozman, a Republican, pointed out in his pre-meeting remarks, the Commodity Futures Trading Commission (CFTC) is the right agency to regulate spot trading of digital commodities. From a macro perspective, 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 assume this new responsibility.

The core of the bill is to clearly define "digital goods" and, based on this, authorize the CFTC to establish a regulatory mechanism for digital goods intermediaries in the spot market. The bill requires the CFTC and SEC to develop coordinated rules for overlapping areas to avoid regulatory vacuums or conflicts. This structure is seen by the industry as beneficial for classifying more digital assets as commodities, thereby circumventing the stringent regulations of securities laws.

The bill proposes establishing a federal registration system for digital commodity exchanges and brokers, requiring these platforms to register with the CFTC and accept compliance regulation. Legislators hope this will encourage compliant operation of the digital asset trading market within the United States, while simultaneously improving market liquidity and resilience. The CFTC will receive new funding 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 segregation of customer funds, prevention of conflicts of interest, and mandatory information disclosure requirements. These provisions aim to prevent trading platforms from misappropriating user assets, engaging in insider trading, and other improper practices, thereby enhancing market transparency.

In addition, the bill adds provisions to protect software developers and innovative technologies, aiming to ensure that technological innovation activities such as open-source code writing and blockchain node operation are not unnecessarily restricted due to regulatory uncertainty.

In addition to the aforementioned bill, Democrats also proposed three amendments during the deliberations: a "Digital Asset Ethics Act" to restrict the president, vice president, members of Congress, and candidates from participating in the issuance, sponsorship, or endorsement of digital assets; a bill to combat "crypto ATM/kiosk" fraud; and a ban on federal bailouts for bankrupt crypto firms. However, all three amendments were rejected by Republicans.

From months of bipartisan cooperation to a sudden breakdown in negotiations

Last November, following the Digital Asset Market Transparency Act passed by the House of Representatives in July, the Senate Agriculture Committee released a draft bill on cryptocurrency industry regulation. This draft, co-released by Buzman and Democratic Senator Cory Booker, is considered a significant positive development despite many unresolved issues.

“From November to the end of the year, we worked from nine to five every day, meeting with all stakeholders for weeks, gathering feedback and ideas from the Buzman team,” a Senate Democratic aide familiar with the matter told The Block. The Senate Agriculture Committee’s negotiations were originally a “very good bipartisan process,” but the situation changed abruptly at the beginning of the new year.

“We really felt we were very close to reaching a bipartisan agreement.” This Democratic aide stated that in early January, Buzman’s team suddenly informed them of a change in plans, having secretly drafted a new version of the bill without the Democrats’ knowledge, intending to begin deliberations on January 15th. Buzman’s team claimed they had made sufficient revisions to the bill text and it was time to vote. However, this bill overturned the progress made by both parties over the past few months.

Although cooperation broke down, Democrats still worked to bring Republicans on the Agriculture Committee back to the negotiating table before the hearings, hoping to reach a bipartisan agreement before the formal vote. However, the negotiations ultimately ended with a partisan vote. The bill will be submitted to the full Senate for consideration without Democratic support.

Democratic chief negotiator and New Jersey Senator Cory Booker blamed the Trump administration for the shift in partisan positions during negotiations. He emphasized that Trump's personal involvement in the cryptocurrency sector was a key obstacle to the eventual passage of his legislation.

Buzman stated that there are fundamental policy differences between the two sides. He also expressed his continued commitment to working with Democrats to push the bill to Congress, adding, "What we want is a bipartisan bill."

However, in reality, the three key amendments proposed by the Democrats show absolutely no sign of cooperation or compromise. Ethical issues remain the main sticking point preventing bipartisan cooperation. Democrats have consistently pushed for the inclusion of provisions in the bill restricting politicians' involvement in cryptocurrency businesses to prevent ongoing corruption among public officials . Such provisions, clearly targeting a conflict of interest with President Trump, are unlikely to garner widespread support or sway from Republicans.

In addition to ethical provisions, Democratic committee members also raised objections regarding DeFi regulation and consumer protection. They worried that the Republican draft bill's insufficient regulation of the DeFi sector could allow decentralized exchanges to operate outside of oversight, thus creating loopholes for money laundering and fraud.

Although progress has been made, no substantial progress has been achieved.

"The U.S. needs to pass this bill quickly to avoid losing momentum under the current pro-crypto government leadership." On January 21, Patrick Witter, executive director of the U.S. President's Digital Assets Advisory Council, tweeted on the X platform in response to Coinbase CEO Brian Armstrong's withdrawal of support for the Senate Banking Committee's version of the crypto bill.

“You may not like every part of the CLARITY Act, but I can guarantee you will hate the version proposed by the Democrats even more.” Witt believes that a crypto bill is inevitable, and if it passes after the Democrats regain power, the final bill will be terrible, or even worse than canceling the legislation altogether.

Therefore, Witt believes that the current situation presents an opportunity to act swiftly and decisively, passing legislation quickly. He stated that some compromises are needed to secure 60 votes in the Senate, "but we must not let perfection become the enemy of the pursuit of excellence."

According to the US Senate legislative process, a bill generally requires at least 60 votes to overcome the filibuster and pass. Currently, Republicans hold a narrow majority of 53 seats in the Senate, meaning that even with the unanimous support of all Republican senators, at least seven Democratic senators would still be needed to cross the 60-vote threshold.

However, the Democratic members of the Agriculture Committee voted unanimously against the legislation and publicly expressed strong dissent. This made the committee-level passage more symbolic, with very limited substantive progress and the core disputes remaining unresolved.

At the hearing, Booker stated, “The White House has made this incredibly difficult. It’s absurd that the President of the United States and his family have made billions of dollars from this industry, yet they are still trying to create a framework without including ethical guidelines that would prevent such serious corruption—this would undermine our democracy.”

Democrats worry that without clear restrictions, the risk of high-ranking government officials "profiting from the crypto industry" will damage public trust. The Democratic-led Public Citizens group even dubbed the current version of the bill the "gryfto bill" (a reference to "crypto" and "grift," implying profiting under the guise of cryptocurrencies), criticizing its failure to close loopholes for the president and his family to transfer benefits.

Amidst staunch opposition from Democratic lawmakers, the bill's prospects in the full Senate have become complex and uncertain. Given the current situation, without substantial bipartisan compromise, this cryptocurrency market structure bill is highly likely to face resistance in the full Senate vote.

Furthermore, the supporting legislation overseen by the Senate Banking Committee remains stalled. Due to unresolved disputes surrounding issues such as stablecoin yields, and the more urgent need for housing legislation affecting people's livelihoods, the Banking Committee postponed its January review of the bill, which has not yet been rescheduled and is likely to be delayed until the second quarter .

This means that even if the Agriculture Committee's version barely makes it to the full Senate for discussion, a complete Senate version of encryption legislation is still not finalized. It may be necessary to merge and coordinate the two committee versions before aligning them with the version passed by the House. If the Senate fails to reach a consensus on a unified version for an extended period, the legislative timeline will be further prolonged.

The timing factor also adds uncertainty to the bill's future. 2026 is a midterm election year in the United States, and generally, Congress's willingness and ability to pass major legislation decreases in the months leading up to an election. If this crypto market structure bill fails to make a breakthrough in the first quarter of 2026, it may be squeezed out of the annual legislative schedule, thus missing the window of opportunity.

More importantly, the November election could change the majority party in the Senate. Some analysts point out that if the Democrats regain control of the Senate after the election, this unfinished encryption legislation could face significant revisions or even be shelved .

However, some Democratic lawmakers, including Booker, have stated that they are not entirely opposed to the legislation itself. They emphasized that they are "willing to work to find common ground" as long as key ethical and protective provisions are met. But if partisan conflict continues, its prospects may become increasingly bleak as the election approaches.