The CLARITY Act Stalls in the Senate: What’s Next for Digital Asset Regulation

In this insight piece, authors Dan Ullman & Sarah Wastler (Orrick) comment on the uncertain future of the Digital Asset Market Clarity Act following its failure to advance in the Senate on September 15, 2026. Although the House passed the legislation in 2025, disagreements over crypto ethics provisions and stablecoin yield prevented the Senate from reaching the 60 votes needed to proceed. With the congressional calendar shortened by the midterm elections, passage during the current Congress now appears unlikely.

The authors explain that regulatory attention is shifting to the SEC and CFTC, which are developing an interim framework under existing authority. The CFTC has begun work on proposed rules that could establish “crypto asset markets” allowing leveraged or margined crypto trading under CFTC oversight. However, agency rules would be more vulnerable to judicial or administrative reversal than legislation and cannot provide the comprehensive federal framework or broad state-law preemption contemplated by the CLARITY Act.

The CFTC’s expected approach will build on the SEC and CFTC’s March 2026 Joint Interpretation, which establishes five categories of crypto assets: digital commodities, digital collectibles, digital tools, stablecoins, and digital securities. The SEC is also considering proposed Regulation Crypto Assets, which would provide certain registration exemptions and a conditional safe harbor for crypto asset transactions. Meanwhile, regulators continue to address practical issues through updated guidance on matters such as tokenized investments, blockchain recordkeeping, and crypto assets used as margin.

For crypto businesses, the authors recommend classifying tokens under the new federal taxonomy, reassessing whether transactions could constitute investment contracts, and confirming compliance with state licensing and securities requirements. State laws will generally remain applicable, particularly to unleveraged spot trading and custody, despite emerging federal exemptions. Companies affected by the SEC proposal should also consider submitting comments before the October 20, 2026 deadline…

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