Crypto's Sisyphean struggle

The Senate's unsuccessful bid to move forward the Digital Asset Market Clarity Act marks a setback for long-running efforts to put crypto into a defined U.S. regulatory framework, according to Cato Institute research fellow Ryan Chan-Wei. The 635-page Clarity Act would have created a statutory market-structure regime to sort tokens into legal categories, license trading firms, and allocate supervisory authority between the Securities and Exchange Commission and the Commodity Futures Trading Commission. Chan-Wei notes the bill advanced further than previous proposals and had attracted an unusually broad coalition, including endorsements from large financial firms such as Goldman Sachs and BlackRock. Proponents argued that a clear regulatory perimeter is needed to unlock institutional capital, expand financial inclusion, and lower cross-border payment costs—outcomes that, the author contends, depend on predictable rules that encourage regulated institutions to deploy capital and give the public grounds for trust. Despite that support, the Clarity Act stalled amid ethics-related objections centered on potential conflicts of interest at high levels of government. Chan-Wei argues these concerns, while important, could have been addressed through other legislative measures without sacrificing the broader market-structure framework. The timing of the Senate defeat also matters politically: key senators who shepherded the bill, including Cynthia Lummis and Thom Tillis, will not return in the next Congress, meaning much of the momentum will dissipate when the new Congress is sworn in. The author places the setback in a longer history of failed U.S. legislative attempts, tracing such efforts back to the Token Taxonomy Act of 2018 and noting that other developed jurisdictions — including the EU, the U.K., Japan and Singapore — have already established clearer regulatory boundaries for digital assets. Chan-Wei concludes that the next Congress must pick up the task, warning that nearly a decade of incremental progress has repeatedly advanced and then rolled back like the mythic punishment of Sisyphus.