CLARITY's failure has little to do with the state of the crypto industry.

Written by: Liu Honglin

CLARITY: This failure has little to do with the crypto industry itself, whether good or bad.

He conceded 126 Democratic amendments, expanded the text from 300 pages to 635, and even accepted 80% of Trump's ethics plan—yet in the end, he still fell short by 11 votes, and not a single one came from the Democrats.

This isn't about "not asking for enough." It's more like someone keeps ratcheting up the price, yet never once bothers to find out what the other party actually wants to buy.

In "Shuo Nan" from the Han Feizi, there is a saying: "The difficulty of persuasion lies in understanding the heart of the person being persuaded."

CLARITY The reason this attempt failed is precisely because of that one sentence.

I. Political Dimension: This Is Not a Matter of Vote Count

49 votes in favor, 50 against—falling short of the 60-vote threshold; all 49 supporting votes came from Republicans, while Democrats and independent senators cast no votes at all.

The House of Representatives passed it in July 2025 by a vote of 294 to 134, and the Senate Banking Committee approved it in May 2026 by a vote of 15 to 9. After more than a year of negotiations, it stalled at the final procedural hurdle.

Here's a detail that's often misunderstood: During the vote, North Carolina's Tillis switched his position from yes to no—not because he changed sides, but as part of Senate procedural strategy. By aligning himself with the majority, he preserved his ability to later introduce a "motion to reconsider," which he did immediately after the vote concluded. Thus, the claim that "the Republicans lost four votes" is inaccurate. Even accounting for his strategic switch, the tally still fell short of 60 by roughly ten votes.

The Republican Party had long believed that the other side was seeking "stricter ethical provisions." Accordingly, it repeatedly tightened the rules: prohibiting public officials from issuing or sponsoring digital assets, mandating the divestiture of significant financial interests, imposing penalties that require the recovery of ill-gotten gains and the payment of fines, and even scrapping the original sunset clause that exempted the president from accountability after leaving office.

Under the revised text, only the Attorney General retains the authority to initiate civil enforcement proceedings against the President; state attorneys general are granted only a limited avenue—namely, the ability to sue the Attorney General for failure to act—and even this route can be closed if the relevant ethics body issues an opinion stating that the conduct in question is not prohibited.

As the old saying goes, this is like using your own spear to pierce your own shield.

If a law is replete with prohibitions yet vests enforcement authority in the very people it seeks to restrain, then it enacts not bans but a procedural framework.

The Democratic Party has never opposed the provisions themselves; it has always opposed the process. The former is a technical issue that can be discussed, while the latter is a matter of trust that cannot be negotiated.

Before the vote, Warren called the new provisions a "pale fig leaf." Her point was clear: no matter how detailed the restrictions may be, as long as enforcement power remains in the hands of those subject to them, the measures are little more than window dressing.

That's why 635 pages aren't enough to get you a ticket.

II. At the Industry Level: This Is Not "Crypto Has Lost"

CLARITY The essence of this bill is not whether "Bitcoin is legal or not," but whether on-chain U.S. dollars can be recognized by U.S. law as an operational clearing system.

This is also why traditional financial institutions take such a keen interest in it.

The dollar's strength lies in the same principle: it rests not merely on the power to print money, but on whether the world is willing to settle transactions within its network.

In the past, this network thrived within bank accounts, correspondent banks, SWIFT messages, and traditional banking hours. It has reached a high degree of maturity, yet it was never designed to handle the small‑value, high‑frequency, 24/7 global flows of funds characteristic of the internet era. What stablecoins truly enable is the real‑time transfer of dollar‑denominated assets in a manner akin to internet‑native assets—though strictly speaking, USDC is not a dollar itself; rather, it is an on‑chain claim on U.S. dollars backed by reserve assets and redeemable on a 1:1 basis, more closely resembling an "internet‑enabled share of a dollar‑denominated money market fund."

This is no longer a small market. As of September 2026, the circulating supply of USDT stands at roughly $183 billion, while that of USDC is about $74 billion; Tether alone holds over $140 billion in U.S. Treasury securities—more than many sovereign nations. Its profits also come almost entirely from the interest earned on this reserve—Circle's revenue in 2024 was approximately $1.7 billion, with 99% derived from reserve interest, while it paid out around $1 billion to distribution partners such as Coinbase.

For the United States, this represents a new pillar: the larger the stablecoin ecosystem grows, the greater the demand for short-term U.S. Treasury securities behind it, and the broader the dollar's range of applications. What CLARITY seeks to do is provide this pillar with its own legal framework—bringing issuance, reserve management, disclosure requirements, and intermediary准入 into the scope of U.S. domestic law.

The fact that it didn't succeed this time doesn't mean this effort will come to a halt. The approach has simply shifted—from congressional legislation to regulatory agencies, state-level initiatives, and compliance measures undertaken by market participants themselves.

Visa's stablecoin settlement pilot has expanded to nine blockchains, with an annualized settlement volume reaching $7 billion; Stripe has simply acquired the stablecoin infrastructure company Bridge.

None of these actions waited for CLARITY.

Viewing this as a game of chess makes things clearer: CLARITY's failure stems from the temporary lack of consensus in U.S. domestic politics, while the on-chain U.S. dollar settlement network is forging ahead in its own way.

III. Regulatory Framework: Stablecoins Are Now Governed by Law

Here's a fact that's often overlooked: CLARITY's failure does not mean that stablecoins are unregulated in the United States.

In July 2025, the United States signed the GENIUS Act, establishing a federal regulatory framework specifically for payment‑type stablecoins. By 2026, the Treasury Department and the Office of the Comptroller of the Currency (OCC) are progressively issuing implementing regulations, which also include pathways for foreign issuers to gain market access.

So the U.S. is currently in a state of division: stablecoins are regulated, but the market structure has yet to catch up.

CLARITY seeks to address a different issue: whether a particular token should be classified as a security or a commodity, how intermediaries ought to register, and where the boundaries lie between the SEC and the CFTC. To this day, no definitive answer has been reached—and yet this very question has served as the starting point for virtually all litigation and enforcement disputes over the past several years.

XRP serves as a stark reminder. The SEC v. Ripple case concluded in August 2025 with both parties withdrawing their appeals, and Ripple paid a $125 million fine. While the litigation has ended, the underlying issues remain: the same asset—whether sold by an institution or traded on the secondary market—can give rise to entirely different legal conclusions. What CLARITY sought to do was codify this distinction into forward‑looking regulations—but it failed to achieve that goal this time.

For the Asian team, another path has already been paved. In April 2026, Hong Kong issued its first batch of stablecoin issuer licenses, awarded to a joint venture led by HSBC and Standard Chartered; by August, the licensed institutions' stablecoins had already gone live. This is not a future plan—it is a functioning regulatory framework.

As for mainland entities, the boundary has always been clear.

In 2021, a notice issued by ten government departments classified virtual‑currency‑related activities as illegal financial operations. Furthermore, in February 2026, Document Yinfa [2026] No. 42 provided clearer guidance on how to handle several specific scenarios, including RMB‑pegged stablecoins, cases where domestic entities control the issuance of virtual currencies by overseas entities, and the tokenization of real‑world assets.

So: For teams whose headquarters, customers, employees, revenues, and expenses are all based domestically, this round of Washington‑level maneuvering has nothing to do with you—everyone can just keep doing what they've been doing.