Bloomberg Analyst Nathan Dean: The CLARITY Act for Crypto Will Not Return This Congress
Bloomberg Intelligence Senior Analyst Nathan Dean stated that the digital asset market structure bill, the CLARITY Act, will not return to the agenda during this Congress's lame-duck session. "A lame duck is lame. We believe the CLARITY Act will not come back." The Senate has failed to advance the bill, and with lawmakers publicly taking sides, the space for negotiating the session has narrowed.
The bill requires about 60 votes to end debate in the Senate. It was not voted on before the August recess, and the September window is squeezed by the midterm elections. The Senate once failed to pass a procedural vote. White House crypto advisor Patrick Witt and Treasury Assistant Secretary for Financial Institutions Luke Pettit stated at a Washington policy meeting that the focus should shift to rule-making by the SEC and CFTC; whether the lame duck can be revived depends on whether the November elections change the majority in both chambers.
Dean believes that if the Republican Party does not simultaneously retain both the House and Senate, there will be no further attempts this round; regulators have signaled that if Congress does not act, administrative rules will fill the market structure gap. Other lobbyists in the industry have claimed to have heard bipartisan senators wanting to make a last-ditch effort during the session, but even they describe the chances as slim. The prediction market had previously priced the likelihood of passing something before the midterms at about 37%.
Those buying are interpreting the legislative failure as a clearer regulatory path, while those selling view the bill as the industry's master switch. Funds are shifting from "waiting for congressional text" to adapting to the rules being solicited from both chambers. Beneficiaries are licensed exchanges operating under existing enforcement and exemptions, while those under pressure are projects that have tied their business models to legislation on the boundaries of securities and commodities.
Dean also outlined the year-end agenda: avoiding a government shutdown with a continuing resolution, a budget adjustment with little hope, and crypto being placed in the "wait and see" category. The White House and Treasury have publicly stated that the congressional waters have cooled.
Source: Public Information
ABAB AI Insight
The CLARITY Act aims to delineate the crypto market structure between securities and commodities, establishing a single federal framework for spot, trading platforms, and custody. The Senate's failure to end debate effectively returns pricing power to the two chambers. Dean compresses the Washington calendar with "a lame duck is lame": post-election, lawmakers are less motivated, making it harder to switch votes on the text. Regulators are moving ahead, a routine action of the administrative state in a legislative vacuum, leaving the next Congress to face established rules rather than a blank slate.
The capital path shifts lobbying budgets from bill text to rule comment letters. Publicly traded platforms like Coinbase seek clear boundaries for banking and market-making access; after the bill's failure, they interpret it as "at least there won't be more hostile legislation immediately." Token projects lose the opportunity to define functional tokens under securities law. The midterm elections become the only reboot key: if control of both chambers changes, the Democrats have less motivation to finalize industry text during the transition period.
This is analogous to how the Dodd-Frank Act was implemented post-2010 through regulatory details rather than passing another major law, and how stablecoin legislation has repeatedly stalled in Senate procedural votes. The industry phase shifts from "waiting for a market structure bill" back to "finding survival niches within the rules of both chambers." The failure contrasts with companies that have staked their entire product roadmap on Congress's session; once procedural votes fail, the narrative for financing simultaneously breaks down.
Structural changes belong to regulatory changes. The pricing power of market structure shifts from legislative text to administrative rules and enforcement discretion. The mechanism is: the 60-vote threshold transforms crypto from a majority party agenda into bipartisan trading; if trades cannot be made, the vacuum is filled by the agency that issues rules the fastest. Those who can modify products during the comment letter cycle will survive the legislative void; those who treat the bill as a switch will find themselves spinning in the lame duck.