Crypto▼ Bearish
Clarity Act Effectively Dead as Senate Delays Crypto Bill
Senate Majority Leader Thune said the Clarity Act won't pass before September, effectively killing the bill until 2029. The bill's complex design also drew criticism from industry analysts.
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Senate Majority Leader John Thune told reporters the Digital Asset Market Clarity Act will not pass before September. That timing, combined with an election year, means the bill is effectively dead until at least 2029, CoinDesk's Crypto for Advisors newsletter reported.
Thune's statement came after a dispute over the bill's ethics language. The provision would prohibit certain federal officials, including the president, from issuing crypto tokens while in office. Republicans and Democrats reached agreement on proposed language, but Sen. Ruben Gallego (D-Ariz.) dismissed the Republican version as "not a serious effort," according to the newsletter.
Congress typically spends autumn of election years campaigning. If Democrats win either chamber, no bill is expected until 2029 at the earliest, the analysis said.
Aaron Brogan, writing in the newsletter, argued that the bill's failure may not be a loss. The legislation's core design, he said, is based on an outdated paradigm. The Clarity Act creates a classification system with digital commodities (fungible blockchain assets capable of peer-to-peer transfer) and network tokens (digital commodities linked to a distributed ledger system). A subcategory, ancillary assets, covers network tokens whose value depends on managerial efforts of an originator.
Primary sales of a network token that is not an ancillary asset generally are not securities transactions. Sales involving an ancillary asset may be treated as investment-contract transactions and must satisfy a disclosure regime under Regulation Crypto, which provides a bespoke exemption with offering limits and other conditions.
The problem, Brogan wrote, is that the core bargain is unattractive. A network token escapes the ancillary-asset regime only if developers relinquish coordinated control and perform no more than nominal managerial work. Developers who retain control must provide extensive initial and semiannual disclosures, recreating much of the burden that made Regulation A unattractive to crypto issuers.