The time is running out for the CLARITY Act before the Senate takes its recess on August 7, and the impact of this delay is being felt differently in the crypto space. Major firms are managing to raise funds, but smaller companies, DeFi projects, and community banks are still expecting the appropriate regulations, which, it seems, will come up only in 2027.
That disparity became clear this week when Cathie Wood’s ARK Invest increased its stake in Coinbase and Circle Internet, according to Investor’s Business Daily, whereas Senate Majority Leader John Thune said nothing except that he was looking for an initial vote before the week was over. Circle managed to gain federal approval for its national trust bank back in July, according to InvestorIdeas. Various firms that can adapt to the regulatory landscape are getting advantages over others while the new framework is still not finalized.
A four-week runway that never opened
As per Yahoo Finance’s Alex Ioannou, a combined Senate draft was supposed to happen approximately on July 13 and have a floor action on July 20, after which the lawmakers would have about a month until the August recess. However, since the Senate rules require 60 votes to break a filibuster, Republicans will still need Democrats’ votes.
On May 14, the Senate Banking Committee moved forward with its proposal of the bill with support from all Republicans and two Democrats. Later, the Democrats demanded an ethics requirement regarding senior government members, which would prevent them from being involved in the crypto business. Despite this condition, the merged draft has not incorporated this wording yet, while Yahoo Finance claims that the lawmakers are still discussing the extent of authority state attorneys general have in enforcing ethical violations. The White House stayed out of these negotiations.
Which version of the bill, and who it hits
The law has continued to grow with each update made to it. As pointed out by Galaxy Research, the draft put forth in January had increased from 278 pages in length to 309 pages in May. Yahoo Finance added that the merger with the Senate Agriculture Committee text had increased it by more than 70 pages, mainly dealing with matters of consumer protection.
The legislation would establish the jurisdiction of the SEC and CFTC depending on whether a token is classified as a security or a commodity. As previously mentioned by Cryptopolitan, centralized exchanges will have clearer rules for operating, while decentralized finance protocols will achieve clarified terms of operation that include definitions of validators and oracles. The new requirements on disclosures will be imposed on token issuers. Meanwhile, the regulatory requirements will be imposed on intermediaries who will bear federal registration and anti-money-laundering obligations. Those compliance costs are easier for large firms to absorb than for smaller competitors.
Banks push back on stablecoin yield
Rewards associated with stablecoins are still one of the biggest pressure points of the bill.
Anthony Scaramucci of SkyBridge Capital accused the “banking lobby” of trying to make last-minute efforts to obstruct the bill, as per an article in Benzinga that quotes a Wall Street Journal editorial criticizing the bill’s loopholes. Similarly, Jamie Dimon, the CEO of JPMorgan, stated that the bill will allow crypto companies to operate and compete with banks without the same safeguards.
Supporters disagree. Senator Cynthia Lummis labeled the legislation “a consumer-friendly disclosure framework for digital assets.” She also highlighted more than 16 anti-illicit-finance mechanisms that she came up with in response to Senator Elizabeth Warren’s criticism.
Bitcoin shrugs off CLARITY delay
Markets seem to have mostly absorbed the legislative slowdown.
Bitcoin declined from around $65,000 to $62,000 last week, a drop of about 2.8%. According to Bitfire Research, as reported by InvestorIdeas, the decrease was due to several reasons, such as the stagnating legislation, hawkish stance of the Federal Reserve, the transfer of BTC worth about $165 million by Trump Media wallet, and the Coldcard flaw costing the owners roughly 1,367 BTC.
Investor sentiment has changed as well. Spot Bitcoin ETF inflows dipped to around $205 million in July, their lowest monthly amount since their inception. Polymarket says the likelihood of the CLARITY Act passing by 2026 has decreased to only 23%; Galaxy Research said in mid-May that the likelihood ranged between 67% and 75%. Citi has also pointed out regulatory uncertainty as a major factor in its outlook for Bitcoin and Ether.
Even if the Senate approves the bill, lawmakers still need to reconcile it with the House version, which was passed with a 294-134 vote in July 2025, before sending the bill for President Trump’s signature. If Congress fails to meet this week’s deadline, September will be the next right time for passing the legislation. Otherwise, it can defer the bill until the midterm election era, thus increasing the regulatory uncertainty and further benefiting large crypto companies.