The Power and Capital Clash: Dissecting the Cryptocurrency Regulatory Revolution Behind the Deadlock of the "CLARITY Act"

In July 2025, the "CLARITY Act" passed the House of Representatives with an overwhelming vote of 294 in favor, marking a milestone in ending the chaos of "enforcement by legislation" in U.S. cryptocurrency regulation. The core of the bill is to clarify the classification and regulation of digital assets—"digital commodities" under CFTC jurisdiction, and "security-type digital assets" under SEC authority—aiming to resolve the jurisdictional disputes between the two agencies that have lasted eight years. However, in January 2026, the Senate Banking Committee's scheduled vote on the 15th was postponed to later in the month, with three major controversies—DeFi regulatory boundaries, stablecoin yield rules, and regulatory authority division—causing this "consensus legislation" to sink into a deep game of interests.

I. Core of the Bill: Four Pillars Reshaping the Crypto Regulatory Order

1. Asset Classification and Regulatory Division: At the federal level, the scope of "digital commodities" is defined for the first time. Assets deeply tied to blockchain like BTC and ETH fall under CFTC; investment contract assets during the ICO phase are regulated by SEC; hybrid assets require joint recognition by both agencies.
2. Decentralization Exemption Mechanism: Non-custodial DeFi services (node operation, self-custody wallet development, etc.) are granted compliance exemptions; tokens certified as "mature blockchain systems" (no single entity controls over 20%, open-source and transparent) can transition from securities to digital commodities.
3. Small-Scale Fundraising Exemption Rules: Digital commodity fundraising by US-registered entities within one year not exceeding $75 million can avoid SEC registration, only requiring disclosure obligations, lowering the fundraising barrier for startups.
4. Cross-Agency Coordination Mechanism: Establish regular coordination processes between SEC and CFTC, clarifying asset segregation and anti-money laundering obligations for exchanges and custodians, filling regulatory gaps and avoiding duplication.

II. The Deadlock Essence: The Interests Behind Three Core Disputes

1. DeFi Regulation: Innovation vs. Regulation
Democrats advocate that DeFi front-end interfaces should bear KYC and blacklist compliance obligations, citing money laundering risks; Republicans defend developer exemptions, claiming code contributions are innovative activities, and strict regulation would stifle US crypto competitiveness. No room for compromise exists between the two sides.
2. Stablecoin Yield: Traditional Banking vs. Crypto Ecosystem Interests
Banks see on-chain stablecoin yield products as "shadow deposits," bypassing deposit insurance and other regulations, advocating for inclusion in banking regulation; the crypto industry counters that these are user-risk investment returns, a core revenue source for platforms, but no compromise has been reached.
3. Regulatory Authority and Political Calculations: Power Balance and Election Politics
With the 2026 midterm elections approaching, lawmakers from both parties adjust their positions based on voter considerations; provisions restricting officials from holding crypto assets touch on Trump family interests, intensifying political game complexity. Meanwhile, SEC seeks to retain some high-liquidity digital commodities under its regulation, clashing with CFTC’s exclusive jurisdiction.

III. Industry Impact: Global Projection of Two Legislative Outcomes

1. Bill Passed (Probability ~55%): Initiating a Compliance-Driven Growth Cycle
The US will become the first major economy to establish a comprehensive crypto regulatory framework, with BTC and ETH gaining valuation premiums, trillions of institutional funds entering compliantly, and spot market liquidity surging; the DeFi industry will see regulatory segmentation, with the US siphoning global crypto projects and talent, consolidating digital finance dominance.
2. Bill Stalled (Probability ~45%): Returning to Regulatory Uncertainty
Short-term market volatility, with mainstream tokens dropping 4%-8%, small coins facing liquidity crises; mid-term, crypto projects and talent will accelerate moving to regulation-friendly regions like Singapore and the UAE, causing the US to miss out on technological leadership; long-term, global crypto regulation will become multipolar, with the EU’s MiCA law expanding influence and US influence waning.

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IV. Deep Insights: Global Competition in Crypto Regulation and the Return to Fundamentals
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The deadlock of the "CLARITY Act" reflects the core contradiction in global crypto regulation: how to balance financial stability, national security, innovation incentives, and investor protection. Countries are competing for the right to shape digital financial rules through regulatory frameworks. The US hesitation is essentially a reallocation of power between traditional finance and emerging technological ecosystems.
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Regardless of the bill’s outcome, the trend toward crypto industry "compliance" is irreversible. Investors should focus on compliant, high-barrier projects, and practitioners need to establish a dynamic balance between innovation and compliance. The Senate vote in late January will reveal a phase result, but the industry’s and regulators’ reconciliation has only just begun. $BTC $GT $ETH