Government shutdown, employees unpaid! US lawmakers push for the CLARITY Act to turn around the encryption coin market.

Despite the U.S. government shutdown causing thousands of federal employees across multiple agencies to be furloughed, several Republican senators, including those in key committee leadership positions, still plan to push for legislation regarding the market structure of digital assets before the end of the year. Senate Agriculture Committee Chairman John Boozman stated that he is negotiating with Democrats to aim for a bipartisan CLARITY Act to be introduced “soon,” with plans to pass the bill before 2026.

Thousands of government workers are furloughed without pay, while lawmakers continue to receive salaries and push bills

(Source: Bloomberg)

In the situation where the government shutdown shows no end in sight, many U.S. senators are working to promote the CLARITY Act, which is legislation on cryptocurrency market structure rules. Although the government shutdown has forced thousands of government employees across multiple agencies to take unpaid leave, Congress members continue to receive their salaries and are allowed to conduct work in the House of Representatives and the Senate. This contrast has raised public questions about priorities, but for the cryptocurrency industry, this is a crucial moment to push for legislation.

A government shutdown usually means that non-essential federal departments cease operations, and hundreds of thousands of federal employees are forced to take unpaid leave or work without pay guarantees. However, according to constitutional provisions, the salaries of members of Congress are not affected by a government shutdown, and they can continue to perform their legislative duties. The original intention of this system design is to ensure that core government functions are not interrupted, but in practice, it often sparks controversy.

In this context, Senate Republicans have chosen to push the CLARITY Act during the government shutdown, demonstrating their commitment to reforming the cryptocurrency market structure. This legislation is seen as the cornerstone of the U.S. cryptocurrency regulatory framework, clearly defining which digital assets fall under securities and which under commodities, and delineating the regulatory boundaries of the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).

Senate Agriculture Committee Chairman John Boozman is a key figure in pushing this legislation. He stated that he is negotiating with Democrats to “quickly” introduce a bipartisan bill regarding market structure. The Agriculture Committee plays an important role in crypto regulation, as the CFTC falls under the jurisdiction of this committee, and the CFTC is expected to take on a greater responsibility in future cryptocurrency regulation.

The Evolution of the CLARITY Act from the House of Representatives to the Senate

This legislative struggle began with the House of Representatives passing the CLARITY Act. The bill was passed in July as part of the Republican “Cryptocurrency Week” initiative, marking the first substantial progress made by the U.S. Congress in the area of cryptocurrency regulation. The full name of the CLARITY Act is the “Clarifying Law Around Investment in Digital Assets Act,” which aims to provide a clear legal framework for digital assets.

The House version of the CLARITY Act primarily addresses the following core issues: establishing a classification standard for digital assets, clarifying the regulatory responsibilities of the SEC and CFTC, providing a compliance pathway for crypto businesses, and protecting investor interests. These elements lay the groundwork for the Senate version, but Senate party leaders have indicated that they will “further refine” the bill to create their version of the cryptocurrency market structure under the name of the Responsible Financial Innovation Act.

The Evolution Path of the CLARITY Act:

House Version: Passed in July, focusing on the foundational classification framework and the delineation of regulatory boundaries.

Senate version: Expanded based on the House of Representatives, incorporating elements of the “Responsible Financial Innovation Act”

Bipartisan Negotiations: The Agricultural Committee and the Banking Committee are jointly participating, seeking support from the Democratic Party.

Target Timeline: To be passed and signed into effect by the President before 2026.

The Senate Banking Committee is another key body that needs to approve the bill. Other members of the committee have also joined bipartisan negotiations, and a possible agreement is expected to be announced in the coming weeks. The involvement of the Banking Committee means that the CLARITY Act not only pertains to commodity regulation but will also touch on securities law and banking regulations, making the legislation more complex but also more comprehensive.

Wyoming Senator Cynthia Lummis is one of the most outspoken supporters of the CLARITY Act. She expressed in August her hope that the Agriculture Committee would review the bill by the end of September and that the Banking Committee would review it by the end of October, looking forward to President Donald Trump signing the bill into law before 2026. However, one of the committee's deadlines has already passed, and another milestone date is unlikely to be achieved during the government shutdown.

U.S. Exchanges Lobbying in Washington to Achieve 90% Consensus

The push from Congress stems from a meeting last week between Brian Armstrong, CEO of the largest compliant crypto exchange in the U.S., and congressional lawmakers during his visit to Washington, D.C. As the largest cryptocurrency exchange in the U.S., it has been a major force in advocating for a clear regulatory framework. Armstrong's trip to the capital demonstrates that even during this unique period of government shutdown, the crypto industry is still actively lobbying, attempting to leverage this relatively low public attention time window to advance legislative progress.

According to Armstrong, the Senate is “working hard” to advance the CLARITY Act and has reached an agreement on about 90% of the issues related to cryptocurrency involved in the legislation. This is an encouraging development as it shows substantial bipartisan consensus on the core principles of crypto regulation. In a time of severe political polarization in the U.S., achieving 90% agreement on such complex technical legislation is itself a rare accomplishment.

So, where is the remaining 10% of the disagreement? Although the specific details have not been made public, industry speculation suggests that the main points of contention may include: the strictness of stablecoin regulation, the legal liabilities of decentralized finance (DeFi) protocols, the exemptions for token issuance registration, and the regulatory coordination mechanisms for cross-border crypto transactions. These issues involve complex technical details and policy trade-offs, requiring more time to reach a compromise.

The lobbying strategy of the largest compliant cryptocurrency exchange in the United States is worth noting. The company not only sent its CEO to personally visit Washington, D.C., but has also built a strong political donation network over the past few years. During the 2024 election cycle, the cryptocurrency industry raised over $260 million through the super PAC Fairshake to support congressional candidates who advocate for cryptocurrencies. These investments are translating into legislative influence, ensuring that even during government shutdowns, cryptocurrency issues remain a priority on the congressional agenda.

Challenges and Opportunities in the 2026 Timeline

The timeline set by Senator Loomis for the passage in 2026 means that the CLARITY Act must complete all deliberative processes in the Senate and House within the next year and a half and receive the President's signature. This timeline appears to be lenient, but considering the complexities of the U.S. legislative process and the current uncertainties of the government shutdown, it is actually fraught with challenges.

First, the duration of the government shutdown is unpredictable. If the government shutdown extends for several weeks or even months, it will severely affect the preparation work of the relevant regulatory agencies. Staff from the SEC and CFTC need to engage in discussions about the technical details of the bill and provide assessments of regulatory feasibility, but during the government shutdown, the operational capacity of these agencies is limited. This may lead to insufficient verification of technical details during the legislative process.

Secondly, 2026 is the year of the United States congressional midterm elections. Historical experience shows that legislative efficiency in election years is usually lower, as lawmakers devote more energy to campaigning. If the CLARITY Act is unable to complete its main deliberation process by the end of 2025, the prospects for its passage in 2026 will face greater uncertainty.

However, there are also favorable factors. President Trump has repeatedly expressed his support for the crypto industry, promising during his campaign to become the “first crypto president” and quickly appointing crypto-friendly regulators after taking office. This means that if the CLARITY Act really reaches the White House, the likelihood of obtaining the president's signature is very high. Additionally, the bipartisan consensus on crypto regulation is expanding, creating space for cross-party cooperation.

From a global competition perspective, the United States faces time pressure regarding its progress on cryptocurrency regulation. The EU's MiCA (Markets in Crypto-Assets Regulation) will come into effect in 2024, providing a clear regulatory framework for crypto businesses. If the United States is unable to pass similar legislation in a timely manner, it may lead to more crypto companies choosing to register in Europe or other jurisdictions with clear regulations, undermining the United States' leadership position in the global cryptocurrency industry.