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