- Experts think time is running out for the act ahead of midterms.
- Other countries will find own paths if bill fails, warns exchange chief.
- Overall crypto pie will shrink if Clarity dies, expert says.
The fate of the Clarity Act — a bill that proposes establishing a regulatory framework for the crypto sector in the US — hangs in the balance as the midterms approach, observers say.
But should the bill fail to pass the Senate, the US may end up losing its leading role in the crypto space, industry insiders warn.
“Right now, the world is looking to the US for the blueprint,” Stephan Lutz, CEO of BitMEX, told DL News. “This function might be at risk if [Clarity] fails — not just as a regulatory setback, but as a trigger for other countries to start carving out their own path, separate from the US.”
The bill has already cleared Congress, meaning its fate now rests with the US Senate. A Coinbase official recently said the bill could be heard by the Senate Banking Committee in the weeks ahead. However, some warn that an impasse over stablecoin regulations is delaying progress, denting hopes of rapid progress.
Overseas flight
The consequences of Clarity’s failure could see some operators move abroad, experts say.
“If Clarity dies, enforcement-by-litigation stays America’s crypto policy,” Pierre Person, CEO of the blockchain firm Steady Labs, told DL News. “The Securities and Exchange Commissions and the Commodity Futures Trading Commission [the US market regulators] will keep fighting over turf, and everyone will keep operating in a grey zone.”
A lack of US framework would see market players up sticks, the expert added.
“The EU has the Markets in Crypto-Assets Regulation [MiCA] framework, while Singapore and the UAE have their regimes,” Person said. “Capital goes where there’s clarity. Clarity’s failure would make offshore issuers more competitive against US-domiciled ones, but would shrink the overall pie.”
Odds falling
In February, Ripple CEO Brad Garlinghouse said there was an 80% chance of the bill passing into law.
Confidence appears to be tumbling, however. On the predictions market platform Polymarket, odds of the bill passing before the end of the year have dropped to 63%.
“The US domestic market would likely remain in its own bubble if the bill fails,” Lutz said. “[It would remain] resilient but isolated. The real issue would lie in the further distancing of the US from the rest of the world.”
And experts said failure could see the crypto industry’s centre of gravity gradually shift away from the US.
“If the bill fails, capital and builders will increasingly move to more predictable environments,” Markus Levin, co-founder of the blockchain company XYO, told DL News. “And, over time, more of the [industry’s] underlying infrastructure would develop outside the US.”
Tim Alper is a News Correspondent at DL News. Got a tip? Email him at tdalper@dlnews.com.
