The US Senate on Tuesday failed to advance the CLARITY Act, a bill designed to establish a market-structure framework for digital assets. The measure did not receive enough support even to reach full Senate debate, temporarily slowing efforts to create unified rules for the crypto market.
The vote leaves banks of all sizes assessing stablecoins, tokenized assets and other crypto-related activities under the existing regulatory framework. It also highlights unresolved disagreements between the crypto industry and the banking sector over stablecoin rewards and the scope of permissible bank activities.
All Democratic senators, including lawmakers who had helped draft parts of the bill, voted against advancing the measure. Several Republicans also opposed the procedural step. People familiar with key lawmakers' positions said banking industry lobbying may have led more senators to reconsider their earlier views.
Senate vote blocks the path to debate
The vote came after the crypto industry devoted substantial political resources to advancing market-structure legislation. The industry spent hundreds of millions of dollars during the 2024 election cycle in an effort to support lawmakers who favored crypto policy and a broad market-structure bill. Crypto companies and banks sometimes share interests in Washington, but they remain divided over stablecoin rewards and how far banks should be allowed to expand into digital-asset services.
North Carolina Republican Senator Thom Tillis voted against ending debate on Tuesday and supported a procedural motion to return the bill to the Senate agenda. That leaves open the possibility that the CLARITY Act could be brought forward again. Before that can happen, however, lawmakers would need to reach agreement with key Democrats on the bill's ethics provisions and how those rules would be enforced over the long term.
Mark Hays, deputy director of Americans for Financial Reform, said the bill could still return to the agenda on procedural grounds. Tillis's change in voting position at the final stage preserved room for another attempt. Provisions already considered by the Senate, as well as sections of the bill passed by the House, could be revisited during the lame-duck session near the end of the current Congress.
Hays also noted that complex legislation is usually difficult to move during a lame-duck session. The outcome will depend on the election results, negotiations between the parties and the remaining legislative calendar. Before Tuesday's vote, House Majority Whip Tom Emmer said that if the bill failed, he would push Congress to continue work on it during the year-end lame-duck session and argued that the legislation needed to be completed this year.
Banking concerns could gain weight under Democrats
Polling surrounding the 2026 midterm elections has raised questions about whether control of Congress could change. If Democrats regain control of either the House or the Senate, the legislative environment for banks could shift. Crypto industry spending during elections has also benefited some Democratic lawmakers, but President Donald Trump's ties to the crypto sector could make some Democrats more cautious about supporting crypto legislation in the future.
Earlier this year, Rhode Island Democratic Senator Jack Reed and Minnesota Democratic Senator Tina Smith proposed provisions backed by the banking industry during consideration of related legislation. Their amendment would have barred holders of stablecoins from receiving rewards. It did not receive a vote after a procedural decision by Senate Banking Committee Chairman Tim Scott, a South Carolina Republican.
If Democrats take control of the Senate, Massachusetts Democratic Senator Elizabeth Warren could become chair of the Senate Banking Committee. Warren has long focused on the implications of crypto entering the banking system, including risks to deposit safety, financial stability and regulatory boundaries. If lawmakers draft another market-structure bill, she could seek tighter conflict-of-interest rules and clearer separation between the banking system and the crypto industry.
Before Tuesday's Senate vote, Warren said the CLARITY Act could allow banks to use US residents' deposits for a range of new crypto activities. These could include lending against crypto assets, buying crypto directly, trading crypto derivatives, operating blockchain nodes and selling crypto software. She said crypto prices have repeatedly fluctuated in recent years and that depositors could face additional exposure if large banks used savings-account funds to expand such activities.
Steve Gannon, a partner at law firm Davis Wright Tremaine, said Democrats may still seek to put some form of crypto legislation on the Senate agenda. But under current conditions, reaching and passing a bipartisan bill in the near term is becoming more difficult. Senate legislation generally requires enough votes to end debate, and a bill may fail to reach final consideration even if it is resubmitted without sufficient Republican support.
Banks turn to stablecoin rewards and tokenized assets
With the legislative outlook uncertain, banks are expected to continue operating under the current rules while monitoring whether crypto companies expand reward programs that resemble yield products. Gannon said large banks with more than $150 billion in assets are studying how crypto infrastructure could affect corporate treasury management, including how to control costs and whether collateral needs to be arranged in advance.
Tokenization is another area drawing banks' attention. If wealth-management clients shift from trading traditional shares to trading tokenized shares, banks will need to reassess custody, trading, settlement, compliance and client-service processes. Gannon said the shift cannot be managed entirely by any one bank, which will have to adjust as other market participants and infrastructure providers change their own systems.
The decisions are more complicated for smaller banks. If stablecoin companies introduce yield-bearing or reward-based products, those offerings could affect the flow of deposits. Smaller institutions will need to track deposit movements more closely and assess whether customers are moving funds to new digital-asset platforms. Because smaller banks generally lack the technology and specialist teams that larger institutions can build internally, they may also need third-party providers for digital-asset tools, risk management and operational support.
Gannon said smaller banks must decide how to obtain the necessary personnel and resources, either internally or through outside vendors, to use crypto tools for expense management. The CLARITY Act's stalled progress does not remove those operational questions. Instead, banks must continue addressing stablecoin rewards, tokenized assets and crypto infrastructure while the industry awaits a unified set of new rules.