White House Crypto Advisor Patrick Witt: Low Hope for Clarity Act to Pass Congress Again This Year
White House crypto advisor Patrick Witt and Assistant Secretary of the Treasury for Financial Institutions Luke Pettit stated at a policy event in Washington that the hope for the digital asset market structure bill, the Clarity Act, to pass Congress again this year is low, as the atmosphere within Congress has become quite cold, with the focus shifting to executive agencies and regulators.
Pettit mentioned that the bill is not dead, but attention has turned to the government; the situation in Congress is "very frozen." A procedural vote in the Senate a week ago failed to advance the bill, which the industry views as the top legislative priority for the U.S. crypto market structure. Whether the lame-duck session can revive it depends on the results of the November midterm elections; if the Democrats expand their seats, the willingness to negotiate by the end of the year will decrease.
Legislative bottlenecks include ethical provisions regarding the President and his family's crypto business, whether stablecoin rewards impact bank deposits, and bank lobbying. The House has previously passed the text, and the Senate needs 60 votes to end debate. The White House has stated that it made significant concessions on the text and added stricter conflict of interest language, but has still not gathered enough bipartisan support. Witt previously stated that if Congress does not pass it, the SEC and CFTC will push forward with active rule-making under their existing authority.
Both emphasized that the SEC and CFTC have made progress, and there is no time to waste; the market structure cannot wait for a post-election legislative surge. The Treasury is also drafting implementation rules for the previously passed stablecoin law, the GENIUS Act, to establish an executable federal framework for payment stablecoins. Some analysts view overseas jurisdictions and traditional banks as relative beneficiaries of the legislative vacuum.
The market mechanism is a shift in rule supply from the legislative market to the administrative market. The buyers are exchanges, custodians, and issuers that require boundaries between securities and commodities, while the sellers are the rule drafts from the SEC and CFTC. The event-driven aspect comes from the official tone following the Senate vote failure. Beneficiaries are institutions that can issue guidance under existing enforcement authority, while those under pressure are lobbying groups betting on a single large law to resolve issuance, trading, and custody. Funding is shifting from political donations on Capitol Hill to legal hours and compliance system reforms in Washington.
Source: Public Information
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Witt's role is to push the negotiations of the White House Digital Asset Advisory Committee into the Senate calendar. Earlier this year, there was hope for passage before July 4, but the ethical provisions changed from "unnamed" to nearly the strictest federal ethical language in history, still failing to meet the 60-vote threshold. After the failure, the shift to "focus on the executive" acknowledges that the legislative window has been consumed by the midterm elections, and only the SEC and CFTC's existing authority can be utilized. This differs from the Biden administration's reliance on enforcement litigation; the path is to first write rules and then occupy positions, avoiding the market continuing to live in the shadow of litigation.
The capital path follows two sets of laws. The GENIUS Act has already granted federal status to payment stablecoins, and the Treasury's rules will determine who can issue them, how reserves are managed, and whether profits can be distributed. The Clarity Act was supposed to delineate the boundaries between securities and commodities for other tokens; failing to pass will force platforms to interpret operations on a case-by-case basis. Banks oppose stablecoin profits for fear of deposit migration; overseas centers use clearer licenses to attract issuers. Money is shifting from "waiting for a large law" to "first obtaining operational stablecoin licenses and brokerage exemptions."
This is analogous to the patchwork of state laws during the legislative void of the 1930s, the reliance on regulatory details after the Dodd-Frank Act in 2010, and the EU's approach of first issuing market regulations and then supplementing with specific stablecoin laws. The U.S. is in a phase of legislative obstruction and administrative head start: the market structure remains vague, while the payment layer is becoming clearer.
Structural changes are regulatory changes. The power of Congress to define the framework is temporarily ceded to agencies' discretion. The mechanism is that the 60-vote threshold turns bipartisan bills into electoral bargaining chips; the executive branch fills in existing legal provisions more quickly, but the risk of litigation and reversal in the next session is also higher. There is no time to waste, meaning that the absence of rules itself serves as a competitive advertisement for attracting business to places with established rules.
ABAB News · Cognitive Laws
If the large law cannot pass, the rules will take the stage in governance.
In an election year, 60 votes are harder than industry lobbying.
The absence of rules is not neutral; it pushes business towards places with established rules.