Senate blocks CLARITY Act, CFTC and SEC issue crypto guidance while stablecoins gain federal rules

Senate Deadlocks on Crypto Regulation Bill

The Senate failed to move forward with the CLARITY Act, known formally as H.R. 3633, during a key vote on September 15. The motion for cloture received 49 votes in favor and 50 against, falling short of the 60-vote threshold required for debate to proceed.

This development follows prior approval in the House of Representatives, which passed the measure in July 2025 with a 294-134 vote. The future of the legislation remains uncertain, and while the failed cloture attempt does not repeal the underlying bill, it represents a significant obstacle for comprehensive crypto regulation.

Custody Practices and the Regulatory Debate

Castellana proposed that the central regulatory issue should be based on assessing actual control. In his view, authorities need to consider whether companies or developers can freeze assets, stop transactions, or change fundamental terms for users. He noted that simply publishing open-source blockchain software does not automatically grant control over customer assets or network operations.

This distinction is crucial as regulatory gray zones often force firms to rely on centralized intermediaries—such as custodians, permissioned access points, or administrator keys—rather than building fully decentralized solutions. Such moves can affect user experience, with open-source blockchains layered beneath interfaces that require identity verification or limit access based on a user’s location.

Portions of the CLARITY Act address these concerns, stating that blockchain developers and infrastructure providers, when they lack the power to control user transactions or digital assets, should not be classified as money transmitters based solely on software publication, self-custody support, or blockchain infrastructure.

Whether a company is considered a ‘non-controlling provider’ depends on whether it has unilateral control over users’ digital asset transactions, highlighting the nuance in current regulatory discussions.

Currently, federal agencies are seeking targeted solutions within their existing authority. On September 17, the Commodity Futures Trading Commission (CFTC) issued a no-action letter stating it will not recommend certain registration requirements for passive software providers, as long as specific conditions are met.

This relief applies to software that facilitates trading with registered futures commission merchants, introducing brokers, and designated contract markets. However, the guidance is narrower than a full exemption for blockchain developers.

The Securities and Exchange Commission (SEC) also addressed digital asset markets by providing temporary relief for certain venues trading tokenized securities. This allows limited trading of tokenized National Market System stocks through permissioned automated market makers and liquidity pools, on a temporary basis pending further rulemaking. SEC Chairman Paul Atkins described this measure as a stopgap until more permanent rules are established.

Mini dictionary: GenLayer Labs is a US-based technology company focused on blockchain infrastructure and compliance solutions. The SEC (Securities and Exchange Commission) is the primary regulator of securities markets in the US, while the CFTC (Commodity Futures Trading Commission) oversees derivatives and commodity markets.

Stablecoins Take a Separate Federal Path

Stablecoins, specifically payment stablecoins, are now subject to a distinct federal rulebook. President Donald Trump signed the GENIUS Act into law in July 2025, establishing a regulatory framework at the federal level for these digital payment assets.

Castellana observed that regulation of payment stablecoins now advances independently of the stalled CLARITY Act. However, questions remain about how DeFi transactions, self-custody wallets, and trading platforms interact with these newly regulated digital assets.

This separation highlights the rising focus on application-layer regulation. Authorities are likely to examine under what circumstances a software developer is considered an intermediary, as opposed to a mere technology provider.

With the legislative future of the CLARITY Act in doubt, agencies continue to employ their existing powers to address narrower issues, while industry observers note that broader reforms could resurface in Congress. Castellana questioned whether this evolving compliance environment increases the number of intermediaries required for users of blockchain technology.

Amid ongoing regulatory uncertainty, companies in the blockchain sector are forced to consider multiple compliance strategies as both agencies and lawmakers debate the rules for digital assets.