Republican Senator Cynthia Lummis said on Wednesday that she has been working late nights collaborating with the Democratic Senators on the much awaited CLARITY Act. As the Senate nears its recess starting August 10, the urgency to finally pass this crypto market structure bill has intensified this week.
Matthew (Matt) Hougan, the chief investment officer at Bitwise shared his two cents on the situation via a detailed blog this week. He said if the CLARITY Act is not brought to the Senate floor for a vote before the recess it could enter the “walking dead” state — where its inactive despite being alive.
Why the pre-recess deadline matters
This week, the CLARITY Act missed a apot on the Senate schedule twice, raising questions on a potential timeline of its passing. This Friday, August 7, is the last day that the Senate will be coming together before breaking for recess the coming Monday, August 10.
On August 10, lawmakers will enter a period of break up until September 14. Backers of the CLARITY Act feel if it is not passed before this 36-day-break, it could lose its legislative momentum.
The upcoming midterm elections slated for November in the U.S. will become the spotlighted priority for the Congress after the recess. Between September and November, the Congress could avoid taking complex bills before an election and subsequent campaigning and funding tussles.
Along with laying out clear market mandates and consumer protection rules for the crypto players in the U.S., the CLARITY Act will essentially divide crypto oversight between the SEC and the CFTC. While the SEC will oversee digital assets classified as securities, the CFTC will control an exclusive governance over spot markets and trading for digital commodities like Bitcoin.
With the bill facing repeated delays being stuck in a legislative gridlock, SEC chairperson Paul Atkins recently said that the SEC was ready to proceed with its own crypto rulemaking.
“Statute is a way of future-proofing something. We’re ready, willing and able to issue rules that address the same issues in CLARITY and other issues in the crypto market… Should something not happen in Congress, then we stand ready to provide that,” Atkins said in a recent interview, raising concerns of the agency trying to grab more control over the digital assets sector.
A reworked version of the 600-page CLARITY Act was released this month that contained President Donald Trump-approved Ethics provision. Under this, public figures like political leaders and federal judges from issuing their own digital assets while in office.
As per Senator Lummis, the co-sponsor for the CLARITY Act, “We’ve gotten a lot of support from law enforcement now who see this as a pro-law enforcement bill. And the President agreed to an ethics provision that no President has ever agreed to.”
On Wednesday she said that she is optimistic about getting CLARITY to the voting floor before the August recess.
The bill would need 60 votes to pass the Senate and head to the President’s desk for an official signing.
Hougan’s analysis
In his blog post, Hougan said the Congress should pass the bill as it would make U.S.’ crypto ecosystem better. The chief investment officer at the Bitwise asset management company that offers products merging crypto with traditional financial products like index funds and ETFs.
Hougan said earlier this week, “Under Senate rules, Senators must file for cloture on Clarity by August 5, for the bill to have any chance of a vote before the recess,” but this did not materialize. CLARITY Act did not make it to the Senate’s schedule for Tuesday as well.
“Even if Clarity fails to pass this week, that won’t give us a final resolution. Instead the bill will enter a “walking dead” state; nothing can actually kill it, but it will lurch along,” he said.
The odds of CLARITY Act passing this year have fallen to between 16 to 13 percent this week, significantly down from the 82 percent chances reflected on Polymarket in February.
Meanwhile, industry insiders are trying to keep the optimism alive. Coinbase vice chair Ryan VanGrack, for instance, recently said that CLARITY will have the September period after the recess in case it does not get voted on by August 7.
In July, Rob Nichols, the CEO of the American Bankers Association had also expressed support for the CLARITY Act saying there is a “lot of good” in the CLARITY Act.
