Former Treasury Advisor: Democrats Abandon Crypto Bill Vote to Avoid Political Costs

Tyler Williams, former digital asset advisor at the U.S. Treasury, told crypto research firm Galaxy that some Democratic senators who previously supported the CLARITY Act turned to opposing votes after confirming the bill could not pass. He interprets this shift as a political cost avoidance strategy, where continuing to vote in favor could lead to negative consequences once the outcome was clear.

This statement addresses the procedural "cloture" vote on the CLARITY Act that took place on September 15 in the U.S. Senate, which ended with 49 votes in favor and 50 against, falling short of the required 60 votes, thus stalling the bill. All Senate Democrats voted against it that day, including Kirsten Gillibrand, Ruben Gallego, and Angela Alsobrooks, who had previously expressed support for the bill. Some Republican senators also voted against it, preventing even a simple majority from being achieved.

Senator Alsobrooks publicly stated that Democrats demanded the inclusion of "clear ethical constraints to prevent the corruption and conflicts of interest that have already emerged in this administration," hinting at potential conflicts of interest from current government officials involved in cryptocurrency. This was seen as a key point of contention in the negotiations. Republican lead negotiator, Senator Cynthia Lummis, made a final appeal before the vote, urging colleagues to vote in favor, stating, "Don’t hand our future over to others," but failed to change the outcome.

The CLARITY Act, which spans over 600 pages, aims to clarify the federal government's regulatory jurisdiction over different types of crypto assets and blockchain projects, delineate the responsibilities of various regulatory agencies, and grant the Commodity Futures Trading Commission (CFTC) new regulatory authority over the crypto spot market. Williams served as digital asset advisor to Treasury Secretary Scott Bessent from February 2025 to July 31, 2026, and previously held positions as global policy head at Galaxy Digital and Deputy Assistant Secretary for Financial Institutions Policy at the Treasury during Trump’s first term. Bessent remarked that Williams played a key role in promoting the policy goal of "making the U.S. the global crypto capital."

This outcome is seen as a significant setback for the crypto industry, which has lobbied for years and invested hundreds of millions of dollars in this "top policy goal." The industry is expected to shift its regulatory focus to administrative agencies like the SEC and CFTC, including the SEC's proposed "Reg Crypto" and tokenized securities exemption arrangements, as well as the CFTC's "no-action" guidance issued to decentralized finance (DeFi) developers. The funding strategies of related super PACs (like Fairshake) may also face uncertainty. The current Congress session will end in December, and the new Congress will take office in January, with the bill's potential revival largely depending on the results of the midterm elections in November.

From a political and resource competition perspective, the vote outcome reflects a direct conflict between the crypto industry's years of lobbying efforts and the political risks of the congressional election cycle: Democratic lawmakers shifted to opposing votes after it became clear the bill could not pass, essentially opting for a lower-cost strategy to avoid being labeled as "tied to this administration's crypto interests" during the midterm election year, a typical political risk avoidance behavior. The bill's stalling also means that crypto companies and investment institutions that previously bet on the CLARITY Act for a clear regulatory framework will still need to operate in a fragmented regulatory environment under the SEC and CFTC, and the lack of regulatory clarity may continue to suppress some institutional investment willingness until the new Congress reassesses the legislative possibilities next year.

Source: Public Information