CLARITY Act 49:50 Breaks: Political Trust Crisis Blocks Legislation

According to Woofun AI, the CLARITY bill broke down with a narrow margin of 49 votes in favor and 50 votes against in the Senate, failed to reach the 60-vote threshold, and the Democratic Party showed an absolute boycott trend with zero support.

This legislative failure does not stem from the logic of the rise and fall of the crypto industry itself, but is embedded in America's domestic political game and lack of institutional trust. Although the House of Representatives passed the bill by an overwhelming margin of 294 to 134 in July 2025, and the Senate Banking Committee approved it 15 to 9 in May 2026, the bill finally stalled at the last procedural threshold after more than a year of complicated negotiations.

It is worth noting that there is a misinterpretation of the fluctuation in the number of votes that occurred within the Republican Party. Tillis of North Carolina changed the vote to a negative vote during the voting period, which was actually a procedural tactic for the Senate. The aim was to preserve the ability to file a “reconsideration motion” in the future through a standing majority, rather than a simple act of defection. Excluding this strategic vote change, the Republican Party is still about 10 votes away from the legal threshold of 60 votes, which shows that simply accumulating votes cannot bridge the deep political rift.

The underlying reason is that the Republican Party is trying to obtain Democratic Party support through unlimited compromises on terms and conditions, while ignoring the other party's fundamental doubts about the execution path. The text of the bill expanded from the original 300 pages to 635 pages, incorporated 126 Democratic Party amendments, and even accepted 80% of Trump's ethics plan, including prohibiting public officials from issuing or sponsoring digital assets, forcibly disposing of significant financial interests, recovering profits and fines in violation of regulations, and removing the sunset clause “stop accountability after the president leaves office.”

However, in the new version of the text, the subject that can directly file civil law enforcement against the president is still limited to the Attorney General. The state attorney general only has a limited entrance to prosecute the Attorney General's inaction, and once the competent ethics agency issues an opinion that “this act is not prohibited,” this path is immediately closed.

This system design of “using the spear of the child, the shield of the trapeze” was denounced by Warren as a “pale shield.” The Democratic Party has never opposed technical ethical provisions, but rather path reliance that keeps the right of execution on the side of the restricted. As stated in “It's Hard to Say Anything”, “It's Hard to Say Anything, You Know What's Said”. The failure of the CLARITY Act essentially failed to understand the Democratic Party's core demands for checks and balances of power, resulting in the 635 pages of text not being exchanged for a vote of confidence.

Judging from the nature of the industry, the CLARITY Act's game focus is not on the legality of Bitcoin, but rather on whether the on-chain dollar clearing system can be officially recognized by US law. Traditional financial institutions pay close attention to this, because the core competitiveness of the US dollar is not only the right to print notes, but also the ability to control global settlement networks. In the past, this network relied on bank accounts, correspondent banks, SWIFT messages, and bank working hours, making it difficult to adapt to the needs of small, high-frequency, 7×24 hour global capital flows in the Internet age. The advent of stablecoins enabled US dollar assets to be transferred in real time in the form of Internet assets for the first time. USDC is essentially an on-chain dollar debt document backed by reserve assets and promised 1:1 redemption, which is closer to an “internet-based dollar monetary fund share.”

According to data compiled by Woofun AI, as of September 2026, USDT circulation reached 183 billion US dollars and USDC circulation reached 74 billion US dollars; Tether held more than 140 billion US dollars in US treasury bonds, surpassing many sovereign countries. Circle's revenue in 2024 was approximately $1.7 billion, of which 99% came from interest on reserves while paying around $1 billion to distribution partners such as Coinbase (COIN.US). For the US, the expansion in the size of stablecoins has directly translated into an increase in demand for short-term US bonds, broadening the use of the US dollar.

Although the CLARITY Act failed to pass, the on-chain dollar clearing network did not stop, but instead moved to building compliance by regulators, states, and market players themselves. Visa's (V.US) stablecoin settlement pilot has been expanded to 9 blockchains, reaching an annualized settlement scale of $7 billion; Stripe is further integrating stablecoin infrastructure through the acquisition of Bridge. These market actions show that the evolution of the industry is not awaiting legislation by the National Assembly, but continues to advance through the path of marketization.

In terms of the current state of the rules, stablecoins are not in a regulatory vacuum in the US. The “GENIUS Act” signed in July 2025 has established a federal regulatory framework for payment stablecoins. Until 2026, the Ministry of Finance and the Office of Monetary Control (OCC) are successively introducing implementation rules and reserving entry paths for overseas issuers.

However, the market structure has yet to fully keep up with the legal framework, leading to a split in US regulation. Another core issue the CLARITY Act is trying to address — whether a token is a security or commodity, the intermediary registration mechanism, and the boundary of jurisdiction between the SEC and CFTC — remains undecided, and is the root cause of lawsuits and enforcement disputes over the past few years. The XRP case is a typical example. The SEC case against Ripple ended with both parties withdrawing their appeal in August 2025, and Ripple paid a fine of $125 million, but the case did not completely resolve the dilemma that the same asset might draw different legal conclusions in institutional sales and secondary market transactions. The CLARITY Act was meant to include this distinction as a forward-looking rule, but its failure meant that the closed loop of the law was not completed. In contrast, regulatory developments in Asia are more clear. Hong Kong issued the first batch of stablecoin issuer licenses in April 2026, a joint venture led by HSBC and Standard Chartered was licensed, and stablecoins from licensed institutions were officially launched in August 2026, marking that the system has entered the actual operation stage.

For mainland entities, the regulatory red line has always been clear and strict. In 2021, 10 departmental notices have characterized virtual currency-related business activities as illegal financial activities. Yinfa (2026) No. 42 issued in February 2026 further clarified how to handle situations such as linked to RMB stablecoins, domestic entities controlling the issuance of virtual currency by overseas entities, and tokenizing real-world assets.

This means that as long as the subjects, customers, employees, and teams whose revenue and expenses are all located within the country, it has nothing to do with Washington's political game and should continue to conduct business in accordance with domestic regulations. The failure of the CLARITY Act reflects a temporary impasse in US domestic politics over power checks and balances, and the global stablecoin ecosystem continues to evolve through diversified regulatory paths and market innovation. In the future, with the implementation of the GENIUS Act implementation rules and the maturity of the Asian regulatory model, the legal status and compliance framework of stablecoins may usher in a new restructuring, but this process will rely more on rulemaking by regulators and compliance practices of market players rather than a single congressional legislative breakthrough.