Main Points:
- Senator Lummis aims to have the CLARITY Act and GENIUS Act passed by end of 2026
- GENIUS Act passed the Senate June 17, 2025 by a 68–30 bipartisan vote
- CLARITY Act has cleared key House committees and awaits a floor vote
- Political hurdles include concerns about conflicts of interest and demands from both parties
- Stablecoin issuers and market-structure stakeholders are preparing for major regulatory changes
1. Legislative Timeline and Goals
Senator Cynthia Lummis, chair of the Senate Banking Committee’s digital assets subcommittee, announced at the Bitcoin Policy Summit in Washington, D.C., on June 25, 2025, that she expects two flagship crypto bills—the Digital Asset Market Clarity Act (“CLARITY Act”) and the Guiding and Establishing National Innovation for U.S. Stablecoins Act (“GENIUS Act”)—to pass both chambers of Congress and reach the president’s desk by the end of 2026. Lummis emphasized that failing to meet this target would be “very disappointing.”
Her timeline reflects a recalibration from earlier projections. In May, Bo Hines, executive director of the Biden administration’s Presidential Working Group on Digital Assets, suggested GENIUS could be ready before the August congressional recess; President Trump also indicated willingness to sign for fast-tracked bills in summer 2025.
2. The CLARITY Act: Clarifying Digital Asset Market Structure
Overview:
- Bill number: H.R. 3633 (119th Congress)
- Status: Passed House Financial Services and Agriculture Committees; pending full House vote
- Purpose: Shift oversight of many digital assets from the SEC to the CFTC, define tokens as commodities or securities, and establish fair trading rules.
Key Provisions
- Regulatory realignment: Treat most cryptocurrencies as commodities under the Commodity Exchange Act.
- Trading transparency: Mandate clear reporting requirements for digital-asset trading platforms.
- Market-structure guardrails: Impose anti-fraud and anti-manipulation rules, akin to equity-market standards.
Market participants, from centralized exchanges to DeFi platforms, are preparing by enhancing compliance teams and engaging with CFTC rule-making. Early adopters of these frameworks—particularly firms already under CFTC oversight—may gain competitive advantage when the law takes effect.
3. The GENIUS Act: Establishing Stablecoin Standards
Overview:
- Bill number: S. 1582 (119th Congress)
- Introduced: May 1, 2025
- Passed Senate: June 17, 2025 (68–30)
Key Provisions
- Reserve requirements: Issuers must hold 100% backing in safe, liquid assets (e.g., U.S. Treasuries, cash).
- Registration and licensing: Stablecoin issuers must register with U.S. regulators or obtain equivalent licensing abroad.
- Transparency: Annual audited financials; real-time public reporting of reserve compositions.
- Consumer protections: Mandatory anti-money-laundering (AML) and know-your-customer (KYC) checks.
Figure 1 shows the bipartisan Senate vote breakdown on the GENIUS Act.
Figure 1. Senate Vote on GENIUS Act (June 17, 2025)
Stablecoin giants are already reacting. Tether ($156 billion market cap) may struggle under the strict reserve regime and could lose U.S. market access; its rival Circle, with more transparent backing, stands to benefit.
4. Bipartisan Dynamics and Political Headwinds
Securing cross-aisle support has proven challenging. Some Democrats refuse to back any crypto legislation until addressing special-interest concerns tied to former President Trump’s personal stablecoin ventures via World Liberty Financial. Meanwhile, Republicans worry that Democrats have not been sufficiently consulted on technical details. At the June hearing, Lummis remarked she did not want a bill that “makes the other side feel unheard.”
The tension underscores a broader trend: crypto’s increasing political salience. Lobbying expenditures reached $265 million in 2024, and stablecoin rules are now a key flashpoint in U.S. financial reform debates. Critics warn the GENIUS Act could replicate past regulatory missteps if conflicts of interest are not fully addressed.
5. Industry Impacts and Stakeholder Responses
Stablecoin Issuers
- Tether: May pivot to non-U.S. jurisdictions (e.g., El Salvador) or launch localized versions to comply.
- Circle: Likely to capture market share with its existing audited-reserve model.
Trading Platforms and Wallets
Shifts in market-structure rules under CLARITY will pressure platforms to upgrade surveillance systems, expand reporting, and potentially alter fee models to comply with CFTC governance.
Institutional Investors
Clearer rules could unlock greater institutional capital inflows, as pension funds and asset managers seek regulated crypto exposure.
DeFi Protocols
Protocols not already aligned with AML/KYC norms will need to integrate on-chain identity solutions or face de-listing from regulated platforms.
6. Next Steps for Congress and Market Participants
- CLARITY Act: Await full House floor vote in late 2025; reconciliation with Senate versions expected in early 2026.
- GENIUS Act: House debate slated for fall 2025; if passed, conference committee between versions likely in Q1 2026.
- Market readiness: Firms should finalize compliance frameworks and engage with both CFTC and banking regulators to influence rule-makings that follow enactment.
Conclusion
Senator Cynthia Lummis’s 2026 deadline represents both ambition and realism. With key hearings completed and bipartisan majorities in hand, the CLARITY and GENIUS Acts stand poised to transform the U.S. crypto landscape—defining the contours of market structure, stablecoin integrity, and regulatory jurisdiction for years to come. For investors and innovators seeking new digital-asset opportunities and practical blockchain applications, the next 18 months will be critical: aligning strategy to an evolving legal framework will determine who leads in a regulated era.
