CLARITY Act delay widens gap between crypto giants and startups

The Senate heads into recess on August 7, and if the CLARITY Act does not clear before then, September becomes the next realistic window, according to Benzinga, with a further failure likely pushing it past the November midterms.

The two Democrats who backed the Senate Banking bill on May 14 have tied their final votes to an ethics provision that would bar senior government officials, including the president, from having crypto business ties, Yahoo Finance reported.

Polymarket priced the chance of the bill becoming law in 2026 at 23% as of early August, Benzinga reported, down from the 67% to 75% year-end odds Galaxy Research cited in mid-May.

The delay hits smaller firms hardest. Large players are raising capital and winning regulatory approvals while the framework remains unfinished. Cathie Wood's ARK Invest increased its stake in Coinbase and Circle Internet this week, according to Investor's Business Daily. Circle won federal approval for its national trust bank in July, per InvestorIdeas. CRCL stock page carries an Alpha Score of 28, labeled Weak, reflecting the uncertainty around its regulatory path.

Smaller companies, DeFi projects, and community banks lack the compliance budgets to navigate the current patchwork. The merged Senate bill has grown from 278 pages in January to 309 pages in May, Galaxy Research noted. The Senate Agriculture Committee text added more than 70 pages, mostly on consumer protection, Yahoo Finance said.

The legislation would split jurisdiction between the SEC and CFTC based on whether a token qualifies as a security or a commodity. Centralized exchanges would get clearer operating rules. DeFi protocols would see definitions for validators and oracles codified. Token issuers would face new disclosure requirements. Intermediaries would carry federal registration and anti-money-laundering obligations. Compliance costs of that scale are easier for JPMorgan Chase and Coinbase to absorb than for a three-person startup.

Stablecoin rules remain a pressure point. Anthony Scaramucci of SkyBridge Capital accused the "banking lobby" of last-minute efforts to obstruct the bill, Benzinga reported, citing a Wall Street Journal editorial that criticized the bill's loopholes. JPMorgan CEO Jamie Dimon said the bill would let crypto companies compete with banks without the same safeguards.

Supporters disagree. Senator Cynthia Lummis called the legislation "a consumer-friendly disclosure framework for digital assets" and pointed to more than 16 anti-illicit-finance mechanisms she proposed in response to Senator Elizabeth Warren's criticism.

Markets have absorbed the slowdown. Bitcoin slipped from around $65,000 to $62,000 last week, a drop of about 2.8%. Bitfire Research attributed the decline to the legislative stall, the Federal Reserve's hawkish stance, a $165 million transfer by Trump Media's wallet, and a Coldcard flaw that cost holders roughly 1,367 BTC, according to InvestorIdeas.

Spot Bitcoin ETF inflows fell to about $205 million in July, their lowest monthly total since launch. Citi has flagged regulatory uncertainty as a major factor in its outlook for Bitcoin and Ether.

Even if the Senate approves the bill, lawmakers must reconcile it with the House version, which passed 294-134 in July 2025, before sending it to President Trump for signature. A failure this week pushes the timeline to September. Another miss likely defers the bill past the midterms, extending the advantage large crypto companies already hold.