CLARITY Act Enters ‘Walking Dead’ State as SEC Prepares Crypto Rules

What Happens When the Senate Votes Sept. 15?

U.S. Senator Jim Risch (R-ID) issued a statement on Aug. 8 that the Senate will start the process of passing the CLARITY Act on Sept. 15, setting the next concrete test after lawmakers missed the August window.

Senate Majority Leader John Thune (R-SD) filed cloture on the motion to proceed to the CLARITY Act hours earlier, fixing the vote for 2:15 p.m. EDT. The question before senators is whether to take up the bill, not whether to pass it.

Risch’s Aug. 8 statement framed the September effort around consumer protection and U.S. economic competitiveness, arguing that continued delays could expose Americans to fraud while shifting investment and financial activity overseas. The lawmaker stated:

“On September 15th, the U.S. Senate will start the process of passing the CLARITY Act. The stakes couldn’t be higher.”

“Failure to pass this critical piece of legislation will leave Idahoans vulnerable to scams and fraud, as well as cede jobs, investment, economic competitiveness, and financial leadership to overseas competitors,” Risch added. “We must advance this important bill and make it law.”

Clearing the procedural hurdle takes 60 votes, requiring at least seven Democrats to join the 53-seat Republican majority. Talks remain open on ethics requirements, illicit-finance provisions, and reconciling Senate Agriculture Committee language. The new Sept. 15 timetable keeps the legislation alive while extending uncertainty over when Congress can establish a permanent federal framework for digital asset markets.

How Does the ‘Walking Dead’ State Shift Attention to the SEC?

The development follows a scenario Bitwise Chief Investment Officer Matt Hougan outlined in a memo before the Senate’s August window closed, predicting that the legislation could remain active even after immediate passage slipped away.

The September vote closely matches Hougan’s description of legislation that survives politically without reaching a final resolution, leaving regulators and market participants operating while Congress continues negotiations.

Hougan wrote:

“The bill will enter a ‘walking dead’ state; nothing can actually kill it, but it will lurch along.”

That prolonged legislative limbo increases the near-term significance of U.S. Securities and Exchange Commission (SEC) Chair Paul Atkins’ rulemaking agenda. Atkins has indicated that regulators can pursue rules addressing many of the same CLARITY Act issues if Congress does not complete the legislation, creating a parallel regulatory track while senators work toward another vote.

What Crypto Rules Can the SEC Advance Now?

Atkins outlined an interim approach in February when he told the Senate Banking Committee that the SEC and Commodity Futures Trading Commission (CFTC) intended to provide a regulatory bridge while Congress works on market structure legislation. Their joint Project Crypto initiative includes work on token classifications and potential exemptions that could permit certain onchain transactions under clearer federal requirements.

The two agencies moved first in March with a joint guidance stating that most crypto assets are not themselves securities, which Atkins called a bridge for entrepreneurs and investors while Congress advances market structure legislation. The SEC’s July regulatory agenda moves that regulatory bridge into specific policy areas, including crypto fundraising, custody, and tokenized securities. The commission is developing rules for how crypto assets can be issued, held, and traded onchain under federal securities laws.

Where Does SEC Authority Stop?

Agency action can clarify how securities laws apply to crypto assets, establish exemptions, address custody, and create rules for securities-related onchain activity without waiting for Congress. Atkins has also described congressional legislation as the stronger way to future-proof U.S. crypto regulation, distinguishing interim agency rules from a statutory market structure framework.

The CLARITY Act would establish a broader division of responsibilities between the SEC and Commodity Futures Trading Commission, including federal oversight involving digital commodities, registration, trading, customer assets, and market infrastructure. Those jurisdictional boundaries require congressional action rather than SEC rulemaking operating solely within the commission’s existing authority.

The Bitwise CIO wrote:

“Crypto will be fine. Even if CLARITY doesn’t pass, the crypto industry will find a way forward.”

Hougan argued that crypto development can proceed despite legislative delays, while regulatory certainty remains unresolved. U.S. Senator Cynthia Lummis (R-WY) is pressing for comprehensive federal market structure legislation that would establish clearer statutory rules for businesses, investors, and regulators.

The next congressional test arrives Sept. 15, when senators decide whether to take up H.R. 3633, which cleared the House 294-134 and advanced from the Senate Banking Committee 15-9. The Senate action will determine whether the bill advances toward a statutory framework, while the SEC continues developing crypto rules under its existing authority.