What Happens If the CLARITY Act Fails to Pass in 2026?

Author: Turner Wright, Cointelegraph

Compiled by: Chopper, Foresight News

U.S. senators return from a month-long state work recess on Monday to consider a bill that the crypto industry has long awaited, aimed at clarifying regulatory rules. But the window for the bill to become law is extremely tight, and it could be pushed to the next Congress, when the political landscape will be completely different.

Republican Senate Majority Leader John Thune has scheduled a cloture vote on the CLARITY Act for Tuesday. Republicans will need support from a few Democratic senators to reach the 60-vote threshold to break a filibuster.

If the bill fails to get a supermajority to advance, it will have little chance of becoming law before the new Congress is sworn in in 2027. The outcome of the November midterm elections will determine whether Democrats will control Congress. One of the bill's strongest supporters, Senator Cynthia Lummis, said on Sept. 6 that if lawmakers cannot reach consensus and send the bill to the president for signature, the next real chance for passage may not come until 2030. Lummis herself will not run for re-election to the Senate in 2026.

This midterm election will see all 435 House seats and 33 Senate seats up for grabs. Prediction market Kalshi's event contracts show that the market favors Democrats to retake the House majority; the battle for Senate control is essentially a toss-up.

After the 2024 election, Republicans won the Senate, House, and presidency, achieving unified control, which they used to push crypto-friendly legislation, including the GENIUS Act. If the partisan makeup of Congress flips, starting next year Republicans will only be able to advance related bills on Democrats' terms.

2026 Election: Crypto PACs' Money Game

Former Ohio Democratic Senator Sherrod Brown, who chaired the Senate Banking Committee, lost his 2024 re-election bid after crypto political action committees (PACs) like Fairshake spent millions on ads supporting his opponent. Brown is now running again for the Senate seat vacated by Vice President Vance.

Fairshake, funded by crypto companies like Coinbase and Ripple, is a key tool for the industry to elect "pro-crypto" lawmakers. Although many candidates backed by its ads won their 2026 primaries, the PAC is not invincible.

In March, Illinois Lieutenant Governor Juliana Stratton won her state's Senate primary despite heavy attack ads from the industry. For incumbents who voted for the GENIUS Act and CLARITY Act, crypto PACs provide financial support; challengers critical of crypto become targets of negative ads.

Jason Plows, a Democratic candidate in Massachusetts' 4th Congressional District, said during his primary against incumbent Rep. Jake Auchincloss: "Auchincloss voted for the CLARITY Act, which is why the crypto industry is spending heavily to fund his re-election." A PAC affiliated with Fairshake ran ads for Auchincloss. Plows added: "The influx of outside crypto money means a few oligarchs have outsized influence over our lawmakers and federal policy. That's why we need to get big money out of politics."

Before 2029: Presidential and Regulatory Landscape Hard to Change

Regardless of whether Democrats win one or both chambers in November, the White House will remain under Republican control until January 2029, and the president retains veto power. For example, if the president vetoes a Democrat-led crypto bill, both chambers would need a two-thirds majority to override the veto.

Moreover, as long as Trump is in office, the heads of the SEC and CFTC will not change. Trump appointed Paul Atkins as SEC Chair and Michael Selig as CFTC Chair. Both regulators have publicly stated that if Congress cannot advance the CLARITY Act this year, the agencies will issue their own digital asset rules.