Original | Odaily Planet Daily (@OdailyChina)
Author | Golem (@web3_golem)
On August 7, according to U.S. media, the U.S. Senate decided to postpone the vote on the Clarity Act until September, meaning the Clarity Act cannot be passed before the U.S. Congress summer recess (August 10 to September 11) and has not even successfully entered the full Senate voting process.
This means the bill, which aims to provide a clearer legal framework for digital asset market structure and the allocation of cryptocurrency regulatory authority, has once again been indefinitely delayed. According to Polymarket data, the probability of the Clarity Bill being successfully signed into law by the end of 2026 has dropped to 14%.
On the surface, the passage of the Clarity Act is just one step away, but the main obstacle remains Democratic dissatisfaction with the current version’s “ethics provisions,” which they believe contain numerous loopholes—such as not covering officials’ children, not prohibiting the holding of existing crypto assets, and relying on the DOJ for enforcement—thus failing to adequately address crypto corruption and consumer protection issues. (Related reading:Just One Step Away—What’s Holding Up the Clarity Act?)
In reality, the Clarity Act has become a casualty of partisan political maneuvering in the United States, with disagreements over the Clarity Act extending beyond technical regulatory debates to become entangled with broader political interests. Democrats have used criticism of the “morality clause” and their anti-corruption stance as their sharpest weapon against Republicans, with the actual aim of opposing Trump and undermining his support in the midterm elections.
Therefore, the delay in the Clarity Act vote is precisely the outcome the Democrats wanted. Because after the September reconvening, the Clarity Act will have less time to be considered by Congress amid disputes over federal budget appropriations and various election-related politics, and the most likely window for the Clarity Act to receive a vote this year is only during the post-November midterm elections congressional “lame duck session.”
The Clarity Act has become a casualty of partisan political gridlock in the United States.
At the beginning of this year, the CLARITY Act was stalled for over four months due to disagreements between the banking and crypto industries over stablecoin yield regulations. Since the bill passed the Senate Banking Committee in May, Democrats have been blocking its progress to a full Senate vote (Odaily note: The Banking Committee ultimately approved the CLARITY Act by a 15-9 vote, with only two Democratic committee members supporting it).
Democratic senator and Banking Committee member Elizabeth Warren submitted over 40 amendments individually even before the Banking Committee’s deliberations, and ultimately, the Democrats leveraged ethical provisions and developer protection clauses in the Blockchain Regulatory Certainty Act to challenge Republicans. As the disagreement over the developer protection clauses was eventually resolved, Democrats assumed their efforts to block the Clarity Act would fail—unexpectedly, President Trump, who had been pushing hardest for the Clarity Act, now revealed his greatest vulnerability.
The Democratic Party has made the ethics clause the main obstacle to the passage of the Clarity Act.
On June 30, the U.S. Office of Government Ethics (OGE) publicly disclosed Trump’s 2025 financial disclosure report, which showed that Trump’s income in 2025 was approximately $2.2 billion, with about $1.4 billion coming from cryptocurrency-related activities (the Meme coin TRUMP contributed approximately $635 million, and World Liberty Financial token sales, equity, and other sources contributed approximately $800 million).
The Trump family's actual profit-seeking activities in the crypto space have once again allowed the Democratic Party to successfully shift the debate over the Clarity Act onto Trump and the White House, easily securing the moral high ground.
On one hand, using moral clauses designed to curb official corruption to constrain the advancement of the Clarity Act appears justifiable, and even if it ultimately delays the Clarity Act vote, Democrats can shift blame onto Trump and the Republicans; on the other hand, by spotlighting anti-corruption and consumer (retail investor) protection issues, Democrats can foster dissatisfaction among voters who are uneasy about crypto or have suffered losses, thereby lowering Trump’s support in the midterm elections.
Initially, the ethics provisions were not the main obstacle to passing the Clarity Act; Republicans had consistently dismissed them as outside the scope of banking/market structure legislation, arguing that such rules should be placed in dedicated ethics legislation rather than being bundled into the Clarity Act. Note that Republicans did not believe the ethics provisions were unnecessary—only that they should not be included in the Clarity Act—a rationale that appeared sufficiently legitimate to outsiders.
However, the Trump family's greed successfully turned the moral clause into a focal point of public attention, making this clearly politically targeted moral clause by the Democrats an issue that the Clarity Act could not avoid addressing.
Under pressure, on July 21, Trump agreed to include ethics provisions in the Clarity Act—but these provisions were insincere and heavily favored the Trump family. For instance, the ethics clause required Trump to divest his crypto-related business assets, yet this arrangement could allow him to defer federal taxes on the proceeds from these assets for years, potentially saving his family millions of dollars in taxes.
Democrats, led by Elizabeth Warren, again dismissed the proposal, citing weak moral enforcement, and demanded even tougher concessions from Republicans. Since then, no one has cared whether moral clauses should be included in the Clarity Act—everyone is focused on whether Trump and the Republicans will make greater concessions.
Elizabeth Warren
Therefore, the forced delay of the Clarity Act is not due to issues with the ethics provisions, but rather because Democrats are deliberately creating problems for Trump and the Republicans. Even if we assume that the Republicans eventually accept the revised ethics provisions, Democrats would likely still raise other demands. Of course, making this assumption is now meaningless, as Trump and the Republicans are unlikely to continue compromising.
The consequences of "veto politics" will be borne by the entire industry.
Trump has not publicly responded to his views on moral clauses or the Democratic Party, but as Patrick Witt, Executive Director of the White House Digital Assets Advisory Council, stated, the president has made historic concessions, yet the Democrats remain unsatisfied: “You can’t hit two home runs with one swing.”
This means the Trump administration believes that Trump and the Republican Party have already conceded too much in this round, and further unilateral concessions in political negotiations with the Democrats may not be advantageous politically—and could even be perceived by voters as signs of political weakness. Therefore, Trump is unlikely to make any compromises before the midterm elections.
On August 6, Elizabeth Warren publicly stated that she supports advancing cryptocurrency-related legislation, but does not support the current Clarity Act, as it fails to adequately address critical issues such as corruption, consumer protection, national security, and economic risks. She implied that these issues arose due to the Trump administration and Republicans refusing to compromise.
Elizabeth Warren, while making pro-crypto statements (Odaily note: Warren had long held a cautious stance toward crypto assets), is blaming Trump for the delay of the Clarity Act, aiming to undermine the young voter base supportive of the crypto industry and reduce Trump’s support in the midterm elections. Thus, at this stage, the Democratic Party may no longer need Trump or the Republicans to offer more sincere concessions—they simply wish to continue using the failure of the Clarity Act as one of their weapons to “undermine” Trump in the midterm elections.
This polarization-driven “vetocracy” makes the prospects of the Clarity Act even bleaker, with the costs to be borne by American society and the entire cryptocurrency industry.
Economist James E. Thorne wrote on August 7 that the delay of the Clarity Act vote until September means the progressive faction opposed to innovation has once again prevailed. Thorne believes the delay signals that preserving the existing power structure is still considered more important than ensuring U.S. leadership in the next generation of currency and financial infrastructure. As the bill continues to be delayed, enforcement fills the gaps that should be addressed by law, potentially resulting in the United States losing its chance to lead in the cryptocurrency industry.
A recent example is the highly publicized case involving the "legal claim" of 3.8 million bitcoins. If the Clarity Act passes before the summer recess, this absurd lawsuit will collapse under Section 20216 of the revised Clarity Act. However, given the current situation, the final ruling on this case will hinge on the hearing scheduled for September 8. （Related reading:Latent Whales Forced to Reveal Themselves: 3.8 Million Bitcoin "Legal Claim" Case Takes Turn）
But Matt Hougan, Chief Investment Officer at Bitwise, believes that even if the Clarity Act fails to pass in the short term, the crypto industry will continue to move forward, as the U.S. SEC may also address some of these issues through rulemaking. He noted that rules introduced by the SEC under Paul Atkins in the near term could be more favorable to the crypto industry and innovation than a bipartisan bill.
The lame-duck session has become the most promising period for the Clarity Act.
On the timeline, the Senate will resume consideration of the Clarity Act after returning in September. However, the window in September is very limited, as federal budget appropriations disputes and various election-related politics will consume most of Congress’s time—time that will be a friend to Democrats but an enemy to Republicans.
The two parties also disagree on the federal budget appropriation bill for the second half of this year; on July 22, Trump mentioned during a speech in Georgia that a federal government shutdown could occur again in September due to disagreements between Republicans and Democrats over spending priorities. If Congress fails to pass the appropriation bill in time, funding for most federal agencies and programs will expire on September 30, the end of the current fiscal year.
Even if the funding bill dispute is resolved smoothly, September and October will be the peak campaign period for the midterm elections, during which there will be an overwhelming amount of debates and advertising, leaving very few working days available for the Clarity Act. Therefore, some believe the likelihood of the Clarity Act passing independently before the midterm elections is now very low, and even some supporters of the Clarity Act are considering attaching it as a rider to the federal budget appropriation bill, which must be passed by the end of September, as a way to indirectly enact it.
But the practical difficulty of this approach is no less than that of the Clarity Act passing independently. Therefore, overall, the only remaining window with the highest chance of passage for the Clarity Act this year is Congress’s “lame duck session,” which spans from November 4, 2026 (after the midterm elections) until January 3, 2027 (before the official convening of the 120th Congress).
The "lame-duck session" refers to the period between the midterm elections and the official swearing-in of the new Congress, named so because outgoing or non-re-elected members (known as "lame ducks") retain the power to vote and legislate. This makes it a uniquely significant period in U.S. legislation, as the impending shift in congressional seats increases the likelihood of partisan compromise, allowing bills that were highly contentious during regular sessions to advance rapidly.
Historically, many significant U.S. legislative initiatives have been enacted during lame-duck sessions, such as the 2010 Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act, the 2013 fiscal cliff agreement, and the 2022 Respect for Marriage Act. Therefore, the Clarity Act also has a good chance of passing during the lame-duck session, provided both parties still view digital asset regulation as valuable.
However, Galaxy also believes risks remain during this period, as political enthusiasm for complex, multi-stakeholder financial regulation may wane as leadership shifts focus to forming committees, confirming nominees, and establishing a new legislative agenda during the lame-duck session.
In the worst-case scenario, if the Clarity Act fails to pass successfully during the lame-duck session before the end of this year, all progress made on the Clarity Act will be nullified once the 120th Congress officially begins its term. This is because the new Congress must restart the legislative process from scratch, and changes in committee composition and potentially very different political motivations will affect the legislative trajectory. At that point, it remains unknown how intense the partisan political struggle over the Clarity Act will become or which side will use it as a weapon.
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