Bernstein: US Clarity Act Revote Unlikely as Regulators Accelerate Rules

The Clarity Act, aimed at establishing a digital asset regulatory framework in the US, failed to pass the Senate, but analysts suggest the SEC and CFTC will accelerate rulemaking to address the legislative gap.

Bernstein analysts noted that with time lost during Clarity Act negotiations, both agencies are expected to adopt 'aggressive and rapid' approaches to regulation. Key areas include token classification for capital raising, developer protections in DeFi and self-custody protocols, innovation exemptions for security tokenization, streamlined approval periods for RWA-based futures, and revised swap classifications for federal sports event contracts.

Bernstein emphasized that while these measures could provide greater regulatory clarity to the industry, they may not offer the same level of institutional stability as a comprehensive legislative framework like the Clarity Act. The Senate failed to secure cloture on the bill, with Bernstein citing tight schedules and ethical concerns around its provisions as reducing the likelihood of a revote.

SEC Chair Gary Gensler has already signaled readiness for rulemaking if Congress fails to act, noting in a July 27 CNBC interview that the agency is prepared to move forward. The SEC recently proposed new rules on August 19 aimed at creating a 'clear and purposeful framework' for crypto assets within certain investment contracts, including exemptions allowing token issuances up to $5 million over four years or $75 million within 12 months, plus safe harbor provisions excluding specific cryptocurrencies from being classified as investment contracts.