CLARITY Act’s DeFi Regulatory Gaps Pose Risks as Senate Negotiations Loom

The CLARITY Act's passage through the House in July marked a milestone, but its journey is far from over. With critical definitions—like what constitutes a 'security' and the scope of DeFi infrastructure regulation—still in brackets, the Act leaves gaping holes in retail investor protections. Senate Banking Chair Tim Scott and Agriculture Chair John Boozman have slated a January 2026 markup, yet this is merely the opening MOVE in a protracted legislative battle.

David Sacks' optimistic declaration of 'finishing the job' belies the reality: merging two conflicting Senate drafts, resolving bracketed language, and navigating conference negotiations will stretch into 2027. The Act's three-bucket framework—digital commodities, investment contracts, and excluded assets—remains theoretical without finalized security classifications or trading venue reporting rules. Market participants eyeing BTC, ETH, and SOL face prolonged uncertainty as regulatory clarity drifts further into the future.