If a law is filled with prohibitions but hands over the enforcement power to the people next to those being prohibited, then it is not writing prohibitions, but a set of procedures.

Written by: Liu Honglin

CLARITY This failure has nothing to do with the merits of the cryptocurrency industry itself.

Giving up 126 Democratic amendments, increasing the text from 300 pages to 635 pages, and even accepting 80% of Trump's ethics plan—yet still ending up 11 votes short, with not a single vote from the Democrats.

This is not "not enough concessions." This is like a person desperately raising the price without ever asking what the other party actually wants to buy.

There is a saying in Han Fei Zi: "The difficulty of speaking lies in knowing the heart of what is being said."

CLARITY The reason for this failure lies in this statement.

1. Political Aspect: This is not a matter of vote count

49 votes in favor, 50 votes against—did not reach the 60 vote threshold; all 49 votes in favor came from the Republican Party, and not a single vote was given by the Democrats or independent senators.

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

A detail that has been widely misread: North Carolina's Tillis changed his vote from in favor to against during the vote, which is not a betrayal, but a Senate procedural tactic—by standing with the majority, he can keep his eligibility to bring up a "motion for reconsideration" later; as soon as the voting ended, he submitted that motion. So, the statement that "the Republicans lost 4 votes" is inaccurate. Excluding his strategic vote change, it was still about 10 votes short of the 60 votes needed.

The Republicans have always thought that what the other side wanted was "stricter ethical clauses." Therefore, they kept raising the stakes: banning public officials from issuing or sponsoring digital assets, requiring the handling of significant economic interests, recovering profits and imposing fines for violations, and even removing the original sunset clause that stated "no accountability after the president leaves office."

In the new text, the only entity that can directly institute civil enforcement against the president remains the Attorney General; state attorneys general have a limited entry point—they can only sue the Attorney General for inaction, and once the ethics oversight agency provides an opinion of "this action is not prohibited," even this path will be closed.

As the old saying goes, this is to use the spear of the other to trap the shield of the other.

If a law is filled with prohibitions but hands over the enforcement power to the people next to those being prohibited, then it is not writing prohibitions, but a set of procedures.

The Democrats have never opposed the clauses, but the pathway. The former is a technical issue that can be negotiated; the latter is a trust issue that cannot be negotiated.

Before the vote, Warren referred to this set of new clauses as a "pale fig leaf." Her meaning was very direct: no matter how detailed the restrictions written in, as long as the enforcement power remains with the restricted individuals, it is merely decoration.

This is the reason why 635 pages could not secure a single vote.

2. Industry Aspect: This is not "cryptocurrency lost"

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

This is also why traditional financial institutions are so invested in it.

The strength of the dollar lies not only in the power to print money but also in whether the world is willing to complete transactions within its network.

In the past, this network relied on bank accounts, intermediary banks, SWIFT messages, and bank working hours. It is extremely mature, but it was not designed for the internet era of small, high-frequency, 24/7 global fund flows. The real job of stablecoins is to allow dollar assets to be transferred in real-time using the internet asset model for the first time—USDC is not strictly a dollar; it is an on-chain dollar debt certificate supported by reserve assets that promises 1:1 redemption, closer to "internetized dollar money market fund shares."

This is no longer a small market. As of September 2026, the circulating scale of USDT is approximately $183 billion and USDC around $74 billion; Tether alone holds over $140 billion in U.S. Treasury bonds, more than many sovereign countries. Its profits almost entirely come from the interest on these reserves—Circle's 2024 revenue is projected at about $1.7 billion, 99% of which will come from reserve interest, while it also has to pay about $1 billion to distribution partners like Coinbase.

For the United States, this is a new leg: the larger the stablecoin scale, the greater the demand for short-term Treasuries behind it, and the broader the usage scenarios of the dollar. CLARITY aims to provide this leg with its own legal framework—integrating issuance, reserves, disclosures, and intermediary access into the framework of U.S. domestic law.

This time it did not succeed, but that does not mean this leg will stop. The path has simply changed: from congressional legislation to regulatory agencies, state levels, and the compliance construction of market participants themselves.

Visa's stablecoin settlement pilots have expanded to 9 blockchains, achieving an annual settlement scale of $7 billion; Stripe simply acquired the stablecoin infrastructure company Bridge.

These actions did not wait for CLARITY.

Seeing this matter as a game of chess clarifies the situation: the failure of CLARITY is merely a temporary stalemate in U.S. domestic politics; meanwhile, the on-chain dollar clearing network is advancing in another way.

3. Regulatory Aspect: Stablecoins already have legal backing

There is an easily overlooked fact: CLARITY's failure does not mean that there are no rules for stablecoins in the United States.

In July 2025, the United States signed the GENIUS Act, establishing a federal regulatory framework specifically for payment stablecoins. By 2026, the Treasury Department and the Office of the Comptroller of the Currency (OCC) are gradually issuing implementation rules, including pathways for foreign issuers to enter the market.

Thus, the current state of the United States is divided: stablecoins have legal backing, but the market structure has not kept pace.

CLARITY was meant to address another issue—whether a token counts as a security or a commodity, how intermediaries register, and where the boundaries between the SEC and CFTC lie. This issue remains unanswered today, and it is precisely the starting point of all litigation and enforcement disputes in recent years.

XRP serves as the best reminder. The SEC's lawsuit against Ripple ended in August 2025 with both parties withdrawing appeals, and Ripple paid a $125 million fine. The case concluded, but the questions have not ended: the same asset could lead to entirely different legal conclusions in institutional sales and secondary market transactions. What CLARITY intended to do was to codify this distinction in forward-looking regulations—something it did not accomplish this time.

For Asian teams, another path has already opened up. Hong Kong issued its first batch of stablecoin issuer licenses in April 2026, led by a joint venture with HSBC and Standard Chartered; by August, licensed institutions' stablecoins were already operational. This is not future planning; it is an operating system.

As for domestic entities, the boundaries have been very clear.

A notice from ten departments in 2021 classified activities related to virtual currencies as illegal financial activities; a February 2026 document further clarified the handling of cases involving renminbi-pegged stablecoins, domestic entities controlling foreign entities to issue virtual currencies, and the tokenization of real-world assets.

Therefore: teams whose subjects, clients, employees, income, and expenses are all domestic are not affected by this round of Washington's struggles; everyone should continue to do what they need to do.