The crypto industry suffered a significant blow after the Senate delayed a vote on the Clarity Act until after its August recess. The industry's No. 1 priority is essentially out of time.
Majority Leader John Thune, a South Dakota Republican, confirmed the delay late Thursday. Both sides of the aisle are still at odds over the bill, which includes putting most crypto trading outside the control of the Securities and Exchange Commission.
Freedom from being scrutinized by Wall Street's sheriff has been a goal for Coinbase Global and other crypto firms, which faced a crackdown under President Joe Biden's SEC.
On Friday, Coinbase traded higher. Coinbase shares rose about 4.4% to $151.86. Bitcoin in the past 24 hours was up about 0.9% to $65,000.
In an X post, Coinbase Chief Policy Officer Faryar Shirzad thanked Thune for his "commitment" to revisit the bill and said "there is every reason to be confident that we can get it done."
The Clarity Act's hopes had faded over the past week, and part of the stock move might be a "buy-the-news" reaction. Investors also might be hopeful that the bill still has a chance after Thune said the Senate would vote on the bill in September.
Still, the legislative calendar is tight enough that it would be tough at this point for the bill to make it across the finish line this year.
"Nothing is dead until the year is up, technically speaking, but it's hard to see the issues that have come up being solved in the time they have left," said Chris Niebuhr, an analyst at Beacon Policy Advisors.
To clear a filibuster, the bill needs at least 60 votes. That means at least some Democrats will need to be on board.
Negotiations for the past couple of weeks have been hung up on a demand by Democrats that the bill include restrictions on President Donald Trump's crypto dealings.
Some GOP lawmakers have also said the bill needs stronger restrictions on the ability of crypto companies to pay yield. Their demand is an ask of community banks who say customers could pull their deposits in favor of crypto accounts.
In the most optimistic case, senators reach a deal on those issues over the recess and can vote during the Senate's three-week work period that begins in mid-September.
The White House and lawmakers have failed to reach an agreement on the ethics issue for weeks. The September vote might simply be a way for the Republicans to put the Democrats on the record as killing the Clarity Act, Niebuhr said.
Crypto companies helm one of the largest political action committees this campaign cycle, and GOP lawmakers are eager for the industry to use that money against their opponents.
For Coinbase, the delay isn't all that bad. The ethics and community banking issues holding up the Clarity Act are arguably tangential to their core goal of seeing most crypto trading put outside the scope of securities laws.
Trump's SEC has been working on industry-friendly regulations for months; if the bill isn't passed, the commission will probably move forward quickly to put those in place.
Barring a miracle, though, the industry is going to have to wait quite a bit longer to enact its biggest legislative priority.
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