The decision reinforces regulatory uncertainty across crypto markets. Ongoing disputes over DeFi oversight and market supervision continue to block consensus. Investors are actively pricing in U.S.-driven regulatory risk as clarity slips further away.

Why it matters?
The CLARITY Act aims to define how crypto assets are regulated and which agencies hold authority. Delays keep institutional caution elevated and sustain uncertainty premiums across digital asset markets.

Why the CLARITY Act Will Not Pass in 2025

Senator John Kennedy, a member of the Senate Banking Committee, said the bill is not ready for a final vote. He noted progress in negotiations but emphasized that key disagreements remain unresolved. As a result, the Senate lacks the support needed to advance the legislation.

Lawmakers originally targeted a vote later this year. However, committee markups were postponed again. The earliest realistic window for action now points to January 2026, extending the regulatory timeline by at least another year.

Tim Scott Confirms the Revised Timeline

Senate Banking Committee Chair Tim Scott confirmed that work on the CLARITY Act will restart in early 2026. He said the Senate and House versions carry different names but function as a single crypto market structure framework.

Scott accused Democrats of deliberately slowing the process. He argued that political resistance has effectively frozen progress. Despite this, he maintained optimism that the Senate could consider a vote early next year.

DeFi Disputes and Political Tensions Intensify

While bipartisan support exists for clearer crypto rules, DeFi regulation remains deeply divisive. In October, Senate Democrats introduced proposals requiring identity verification and strict anti-money-laundering compliance for DeFi platforms. The industry strongly opposed the move.

Republican lawmakers warned that such requirements could cripple DeFi activity in the United States. At the same time, some Democrats argue that advancing crypto legislation would legitimize business ventures linked to President Donald Trump.

These include a Trump-branded meme coin, the World Liberty Financial DeFi project, and American Bitcoin, a mining firm co-founded by Eric and Donald Trump Jr. Representative Maxine Waters previously said passing these bills would make Congress complicit in what she described as presidential crypto corruption.

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The bill, officially titled Guiding and Establishing National Innovation for US Stablecoins (GENIUS), initially failed to gain support from some Democrats on May 8 but passed a procedural vote in the Senate on May 20 with a 66–32 majority. It now moves to the Senate floor for full debate. The legislation aims to clarify stablecoin collateral requirements and enforce strict Anti-Money Laundering (AML) compliance.

“This act doesn’t just regulate stablecoins; it defines them as a trusted component of the financial ecosystem,” Grachev stated.
“With clear rules comes trust, and that’s exactly what institutions have been waiting for. Stablecoins are no longer a crypto experiment — they’re faster, simpler, and more transparent than fiat. It’s only a matter of time before they become the default form of money.”

GENIUS Act as a Step Toward a Digital Finance Infrastructure

Grachev believes the GENIUS Act could mark the first step toward a borderless, programmable digital financial infrastructure.
“When the U.S. acts on stablecoin policy, the world pays attention,” he said, adding that the bill could trigger a broader shift in the global financial system.

The bill is co-sponsored by Republican Senator Cynthia Lummis, who noted that Memorial Day could be a reasonable target for its passage.

Regulation Alone Isn’t Enough — Yield Matters

However, Grachev emphasizes that regulatory clarity alone is not sufficient. Institutional investors also seek stable and predictable yield products. His firm, Falcon Finance, is currently developing synthetic yield-bearing dollar instruments tailored to meet this demand.

As of now, yield-bearing stablecoins make up approximately 4.5% of the total stablecoin market, with a circulation value around $11 billion.

Offshore Issuers Remain a Challenge

Despite the support for the GENIUS Act, some experts have voiced concerns. Vugar Usi Zade, COO of Bitget exchange, noted that the bill fails to address offshore stablecoin issuers like Tether, which still play a major role in global liquidity.

“The bill will likely impose higher costs on U.S.-based issuers, which may drive market consolidation and benefit firms with stronger resources,” Zade said. Nevertheless, he acknowledged that depending on its implementation, the law could contribute to a more stable and reliable stablecoin ecosystem.

In essence, the GENIUS Act represents the first comprehensive effort by the U.S. to set clear rules for the stablecoin market, and it could serve as a global benchmark moving forward.

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The U.S. Senate has made a significant breakthrough in the long-debated stablecoin regulation. In a vote held earlier this week, senators surpassed the 60-vote threshold required to advance the bill to a final vote. This development is seen as a critical turning point for the digital asset and cryptocurrency market. 

In previous votes, the bill had failed to garner sufficient support. During the May 8 session, both Democratic and Republican senators criticized the bill, stalling the process. At the time, many senators voiced concerns about inadequate consumer protections and national security measures. 

However, recent negotiations and amendments have shifted the landscape. Notably, Democratic Senators Ruben Gallego and Mark Warner announced their support for the revised bill. Gallego stated, “The previous version carried some risks, but the changes have largely addressed my concerns.” Warner expressed satisfaction with the increased focus on consumer rights. 

Senator Ruben Gallego reiterated that the amendments significantly alleviated his concerns. 

“With this vote, I look forward to continuing work on a final law that protects consumers and maintains America’s leadership in digital asset innovation,” he said. 

A New Legal Framework for Stablecoins 

The new regulation establishes clear rules for stablecoin issuers. Companies wishing to operate in the U.S. will be required to obtain a license, transparently declare their reserves, and be subject to audits. Additionally, the bill restricts large technology companies from issuing their own stablecoins, aiming to prevent private sector control over monetary policy. 

Senator Kirsten Gillibrand highlighted the role of stablecoins in the global economy, stating: 

“It is essential for the U.S. to pass legislation that protects consumers and promotes responsible innovation.” 

The bill also aims to regulate foreign companies offering stablecoins to U.S. citizens, ensuring both domestic market stability and reducing risks such as money laundering. The Senate is expected to discuss the bill in greater detail in the coming days before sending it to the House of Representatives. If both chambers approve, the law will take effect. 

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Are Trump’s Crypto Ties Unethical?

In a letter dated May 5 to the U.S. Office of Government Ethics, Senators Elizabeth Warren and Jeff Merkley alleged that Trump and his family stand to profit personally from an investment involving MGX, Binance, and World Liberty Financial (WLFI). The senators claimed that MGX chose WLFI’s USD1 stablecoin for a $2 billion investment, raising red flags.

They warned the deal could potentially violate the U.S. Constitution’s Emoluments Clause and federal anti-bribery laws. There are concerns that individuals close to Trump could earn hundreds of millions of dollars from this transaction.

“This agreement may allow the Trump and Witkoff families to profit from foreign influence through stablecoin activity,” the senators wrote.

Crypto Legislation Gridlocked in the Senate

These developments have derailed momentum for new stablecoin and digital asset legislation in the U.S. Senate. Among the affected bills is the GENIUS Act, which was expected to be debated in the coming weeks but is now caught in political crossfire.

Senate Majority Whip John Thune suggested that some sections of the bill might be revised to address Democratic concerns. However, even Republicans like Senator Rand Paul have started questioning their support, exposing internal divisions that are slowing down the legislative process.

Meanwhile, Representative Maxine Waters, a senior member of the House Financial Services Committee, took steps to block a May 6 digital assets forum, where a draft bill titled “American Innovation and the Future of Digital Assets” was scheduled to be discussed.

Crypto Community Pushes Back Against Political Resistance

Leaders in the crypto industry have expressed frustration over political interference with stablecoin legislation. Tyler Winklevoss, co-founder of Gemini, criticized the obstruction in a post on X:

“Elizabeth Warren and Chuck Schumer haven’t learned a thing. If Democrats want to keep losing elections, they should keep blocking stablecoin legislation in the Senate.”

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Ripple’s Chief Legal Officer Stuart Alderoty expressed optimism, hoping leadership changes at the SEC would lead to a more reasonable approach.

Paul Grewal, Coinbase’s Chief Legal Officer, also echoed this sentiment on social media after Trump’s victory on November 6. Both Coinbase and Ripple were among the top donors supporting pro-crypto candidates in this election.

One of Trump’s main promises to crypto voters includes replacing SEC Chair Gary Gensler. Under Gensler, the SEC imposed stringent measures on various crypto firms, especially around classifying digital assets as securities, which led to extensive legal battles within the industry. Ripple, engaged in litigation with the SEC since 2020, has already spent millions on this battle. Ripple CEO Brad Garlinghouse mentioned that the company expects to spend up to $200 million on legal defense.

Trump’s re-election grants him the power to remove the SEC Chair, although Senate approval is required to complete the process. Crypto-friendly SEC Commissioner Hester Peirce is seen as a potential successor to Gensler.

Although the future SEC leadership remains uncertain, Gensler appears open to potential leadership changes. He told the Wall Street Journal, “Presidents traditionally choose the SEC Chair, which is a beautiful part of our democracy,” signaling acceptance of the possibility of new leadership.

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Currently serving as the top Republican on the committee headed by Sen. Sherrod Brown, D-Ohio, Scott has been supportive of the crypto sector. Should Republicans account for the majority of the presently Democrat-owned Senate in the next elections, Scott may spearhead the committee.

“Wouldn’t it be kind of cool if we had a subcommittee on the banking committee focusing on the industry so that we bring more light to the conversation and more hearings on the industry so that we get things done faster?” Scott said on Wednesday during the Wyoming Blockchain Symposium.

Challenges in the Senate Banking Committee

Like the Senate Banking Committee, the House Financial Services Committee has jurisdiction over the U.S. Securities and Exchange Commission, has a group dedicated to digital assets, and has conducted several hearings targeted at crypto over the years.

“Headwinds” in the Senate Banking Committee, especially from Brown and Sen. Elizabeth Warren, D-Mass., said Sen. Cynthia Lummis, R-Wyo., on Wednesday during the panel with Scott.

Lummis remarked, “We’ve hit the wall on the banking committee; they have been quite influential with their Democrat side of the aisle colleagues.”

Lummis Optimistic About Crypto Legislation

Lummis still sounded confident, though, that legislation may pass this year. She added that a future law to control cryptocurrencies must pass the Senate Agriculture Committee. Under a best-case scenario, Lummis said, a measure emphasizing the U.S. Commodity Futures Trading Commission, under its jurisdiction, passes out of that committee following the election.

Legislation would then be “Christmas-treed,” Lummis said, with add-ons including wording to control stablecoins and maybe Senate Majority Leader Chuck Schumer’s SAFER Banking Act. That legislation would provide banks with access to cannabis companies. Earlier this year, ideas surfaced combining crypto laws with a bill allowing financial institutions to offer services to the marijuana sector.

Lummis added that declining days to work in Washington could provide difficulties.

Ongoing Legislative Efforts

Though they have not yet been presented before President Joe Biden’s desk, lawmakers in Washington are working on several measures to control cryptocurrencies. Legislators in the Senate are working on laws controlling the crypto sector. Introduced in April, a bill by Sens. Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., would restrict algorithmic stablecoins while building a framework for stablecoins. Expected to be brought back up in September, Senate Agriculture Committee Chair Debbie Stabenow, D-Mich., is also working on legislation to control cryptocurrencies.

On the House side, legislators enacted a Republican-led crypto market structure bill in May that grants the CFTC additional jurisdiction over “digital commodities” and declares the SEC will monitor digital assets presented as part of an investment contract. Work on legislation controlling stablecoins has also been in progress.

Last week at a Crypto4 Harris town hall, Schumer declared that he plans to draft laws controlling cryptocurrencies by the end of this year.

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“The tally, a stunning 60 ‘Yeas’ in the Senate vote, sends a strong signal that both houses of Congress, across the political divide, clearly disapprove of this rule,” said the Blockchain Association, a crypto advocacy group.

Related: SEC Ether ETF: Odds Low, Potential High for Surprise

But President Joe Biden declared he would veto the resolution to “protect investors in crypto-asset markets and to safeguard the broader financial system” before it was approved by the US House of Representatives.

But Perianne Boring, the CEO and founder of the Blockchain Trade Association Digital Chamber, thinks that the White House would “rethink its strategy and position” if 21 Democratic Party senators backed it. “The tides are turning for crypto in Washington,” she says.

Beyond politics, the crypto community is not the only group hoping Biden will sign H.J. Res. 109. Openly urging “President Biden to move quickly to sign this resolution into law to help protect American consumers” is the American Bankers Association.

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