CLARITY Act fails, but ‘crypto didn’t blow its big moment’ yet

The much-anticipated CLARITY Act approval, which was scheduled for a September vote, has now faded into thin air.

The Senate ultimately failed to advance the market structure bill on the 15th of September, with the procedural vote ending just at 50 (no) and 49 (yes), with four Republicans joining Democrats in opposition.

The never-ending negotiations between the Republicans and Democrats

Brendan Pedersen, Senior policy reporter at Punchbowl News, said that senators and their aides spent thousands of hours negotiating. The two parties sometimes reached agreement in principle, but those compromises repeatedly went south afterward.

According to Pedersen, crypto industry pressure became a major source of friction, as Democrats said Republican negotiators repeatedly revised provisions after industry pushback, particularly on crypto ethics.

Democratic aides also reported receiving immediate complaints from lobbyists after private meetings.

In the blame game, Punchbowl cited Coinbase and a16z crypto among the firms frequently associated with this pressure. 

Is Coinbase’s CEO the main culprit?

The Wall Street Journal (WSJ) framed that the CLARITY Act’s failure was not just a partisan or ethics-driven collapse but also the result of internal conflict within the crypto industry. 

According to the WSJ, Coinbase CEO Brian Armstrong became a key figure in the CLARITY negotiations due to Coinbase’s concerns over stablecoin rewards, DeFi, tokenization, and CFTC authority.

Armstrong defied the allegations, saying he opposed an earlier draft because he believed it was flawed and unlikely to pass. But after those issues were later addressed, he said he ultimately supported the Senate version.

However, Nate Geracci, president of NovaDius Wealth Management, said, 

My take? Crypto didn’t blow its big moment. The banking industry & politicians in its pockets got their way. Let’s not overthink it.

Not a loss for the crypto industry

Despite this setback, many industry leaders have not lost their hope, as Circle CEO Jeremy Allaire suggested that the failure of the CLARITY Act does not change the underlying momentum behind blockchain and digital asset adoption.

He pointed to the growing number of technological and commercial progress around major banks, capital-markets firms, and financial infrastructure companies that are happening regardless of whether Congress has passed a comprehensive crypto market-structure law. 

He said, 

Industry in the US and around the world continues to march on. And it takes time, but that doesn’t slow down the progress.

Echoing similar sentiments, Michael Saylor added that this has given the industry more room to develop under the current regulatory environment before Congress locks anything into statute. 

He commented, 

The Digital Assets industry is better off moving forward with supportive rules from the SEC, CFTC, Treasury, and banking regulators than accepting the restrictions in the final CLARITY compromise.

Final Summary

• Coinbase’s CEO and a16z crypto fall at the center of the blame game of the CLARITY Act failure.
• Saylor and Allaire believe that the crypto industry is better off without the market structure bill.