An Astounding Crypto Future Is Held Down by 20th Century Law

Yet a prize remaining just inches out of reach is cause for heartburn, even as serious supporters like Wyoming Senator Cynthia Lummis repeatedly say that “this fight is far from over.” The Senator is correct, but not in the way she wants.

If Democrats win either the House of Representatives or both the House and the Senate, the Clarity Act may have to wait until 2029. Meanwhile, countries with well-regulated capital markets such as Japan, the U.K., the EU, and the UAE have passed similar crypto-related regulatory legislation in the past 12 months, making the U.S. the global laggard.

This foot-dragging is a shame. The U.S. legislation solves many policy conundrums that have haunted the industry since the FTX debacle in 2022 gave crypto products a bad name and sent Sam Bankman-Fried to prison for 25 years.

The Clarity Act defines when a digital asset is a security and when it is a commodity. It ends the decades-long turf war between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC), which forced crypto exchanges like FTX to operate offshore. It creates an easy federal path to registration for crypto exchanges, and provides an actual registration and disclosure regime, reducing the risk of accidental noncompliance.

Regulation will continue, albeit with little Congressional influence. Even without passage of the Act, the Trump administration has already divvied up regulatory responsibility between the CFTC and the SEC. For decades, the sister agencies viewed the other as a threat. Now they are working together better than at any time in their history. To quote President Lyndon B. Johnson, it’s better to have both regulators “inside the tent pissing out, than outside the tent pissing in.”

But the lack of congressional action remains suboptimal, especially given all the work the crypto industry has done. Building a bipartisan reputation in Washington, D.C., is hard in any era, let alone during the Trump years, where partisan fervor has reached witch-burning levels.

The genius of the industry’s political activity lies in its focus on independent advertising supporting congressional candidates who back the crypto economy, regardless of party.

Through the end of June, the main pro-crypto super PAC, Fairshake, raised $82 million and has spent it defending pro-crypto officials in both parties. Together with additional industry donors such as Ripple Labs, Coinbase, Crypto.com, and the venture capital firm Andreessen Horowitz, about $193 million has been raised for the 2026 midterms. This amount surpasses the massive $190 million haul spent on 2024 federal races.

And it's not just the money.

For Republican supporters like Congressman Tom Emmer of Minnesota and Senator Bernie Moreno of Ohio, support for crypto gives voice to their pro-small-business, start-up economic beliefs, while supporting an industry that is in direct competition with a Northeast U.S. financial establishment that folded like a cardboard box under the pressures of DEI and ESG campaigns in the 2010s and early 2020s.

For Democrats like Congressmen Richie Torres of New York and Don Davis of North Carolina, the motivations are surprisingly similar. Yes, the fundraising and political support are great, but it's also on brand for Democrats to attach themselves to a younger, urban demographic that holds brick-and-mortar banks in contempt for all the ills of American history, from the Atlantic slave trade to a shortage of mushroom tea in Brooklyn.

So, life will continue on without the strong statutory shield that the Clarity Act would have provided. But it is a life with more risks; a life outside the castle walls.

For instance, a large stablecoin will eventually break its dollar peg through fraud, custody failure or sanctions, causing stress in the global bond market and U.S. money markets.

And crypto will continue to benefit criminals and sanctions evaders like Iran and Russia. It’s believed a Russian ruble-backed digital token processed at least $93 billion in the past year, making it the largest non-dollar-backed stablecoin.

It’s not impossible to imagine a Democratic administration in the next decade reasoning that the industry is a national security risk. Their underlying motivation would probably be to penalize the crypto-bros who cozied up to the Trump administration, but depending on the rationale and current events, such an event could happen.

The Clarity Act would reduce the likelihood of such reversals from rare to nonexistent because securing 60 votes in the Senate demands bipartisanship, and, in this day and age, bipartisanship means political legitimacy. And it would give the CFTC and the Treasury Department far greater authority and enforcement resources to address these threats.

In the end, Crypto is no different from other industries in adolescence. From the mining of Bitcoin’s Genesis block in January 2009 to crypto’s current multi-trillion market cap, the product's usefulness that must be proven. Crypto’s promise as a digital replacement for the physical banking system, with no intermediary bank, no credit card, and no mortgage company taking their ounce of flesh, must be better and safer for consumers than the risks it poses.