Crypto’s Clarity Act heads into a make-or-break week with no clear outcome

Depending on who you hear from, the Digital Asset Market Clarity Act has a real shot at a last-second deal that will catapult it into law. Or no shot at all.

It might also reemerge inside another bill. Or be shunted aside for years in legislative purgatory.

The crypto industry is awash in Clarity Act theory, but the truth seems to hew close to a legislative shrug at this stage. For a sector that has so much on the line, the frustration can be palpable in a process that seems to be neither entirely dead nor alive, akin to the thought exercise of Schrödinger's cat.

Much of the conjecture hinges on the potential September 15 vote that was set up in the final moments before the Senate dispersed for its August break. But the Senate is not an entity easily nailed down to strict timetables, so the certainty of the vote meant to establish whether Clarity can beat the 60-vote threshold necessary for Senate passage is not necessarily set in stone.

To be sure, the fact that the bill has dragged into the final do-or-die weeks of the session is not a good sign. The more time that goes by, the lower the odds of a crypto law emerging. But the Senate is a land of last-minute negotiation, and the emergence of the latest draft last week was the Republican side's marker for where they stand in the talks, representing a number of compromise positions already negotiated with Democrats.

"We are optimistic heading into Tuesday’s vote and deeply grateful to the senators in both parties who have stayed at the table and worked through difficult issues in good faith," Blockchain Association CEO Summer Mersinger said in a statement to CoinDesk. "This is a defining moment for the next generation of financial innovation."

However, the Democrats had previously insisted that an ethics approach that could significantly curtail President Donald Trump's crypto involvement is needed before they'll make up the current vote shortfall. They've argued that the restrictions that Trump already agreed to (and that would mark the first of their kind for a sitting president) would be easily sidestepped. A handful of Republicans have also expressed opposition to the bill, citing concerns about how a stablecoin yield provision might affect community banks.

If there is a vote, it could go one of two ways: It fails, forcing Democrats to vote no while Republicans hope the opposition party would suffer campaign torment from the deep-pocketed industry. Or it could succeed, if the final compromises are landed or the Democrats agree to keep the process open for amendments. But a win in the first vote doesn't necessarily mean smooth sailing through the rest of the multi-stage process.

Or, the vote simply doesn't happen on September 15, as some crypto insiders have suggested may occur. That could also be read in a couple of different ways: The industry's optimists who are still cheering the process might say that it was postponed because last-minute talks are still constructively moving forward and both sides want to ensure a bipartisan victory before they vote. Or, those who have resigned to Clarity's failure might say it was put off because the votes weren't even there to get a majority, as some Republicans continue to express worries about stablecoin yield programs that rival banks' interest-bearing deposit accounts.

Bottom line: September 15 almost certainly won't be the dramatic moment that decides the fate of the Clarity Act.

If the legislation happens to experience a rush of final negotiations and White House concessions that lend it more than 60 supporters, the first vote is still very much just a first vote. There could be an amendment process after that, and time to debate and complicate matters further.

The so-called cloture process for a Senate bill can be a lengthy affair. The Senate will have a few work weeks in September to figure it out, or not. If Clarity isn't done by then, it's theoretically (if narrowly) possible it could keep getting negotiated.