Author: Jia Yan Kea

On Thursday morning, at Zombie Café on California Avenue in Palo Alto, Silicon Valley's Alan Walker peeled back the layers of the vote to reveal its eight-fold impact.

It was 7:30 a.m. on Thursday, and California Ave in Palo Alto was still a bit chilly. Alan ordered a cold brew and an everything bagel, and sat at a high table by the window in Zombie Café—his weekly Thursday morning market watch. At 10:30 ET, just half an hour after the East Coast opened, his phone screen lit up, then lit up again. A CNBC notification, a CoinDesk notification, and a signal from his friend a16z all popped up simultaneously: Senate Banking Committee, 15-9, the Clarity Act passes. Alan put down his coffee, glanced at me, and said: "You absolutely must hear all eight layers of meaning in this—because 95% of the interpretations outside only scratch the surface."

01. The "Partial Answer" to a 7-Year-Old Mystery

Alan said, "First, clarify the background." This story begins in 2017.

Starting in 2017, the SEC adopted a "regulation by enforcement" approach towards the crypto industry. This means that since there are no specific laws governing crypto assets, the SEC uses the 1933 Howey Test to determine whether a token is a security. If it is, you're breaking the law; if it isn't, you're operating in a gray area. This began a seven-year game of "guessing the SEC's intentions."

After the ICO bubble burst in 2018, the SEC sued Telegram, Kik, and Block.one. During Gensler's tenure from 2021 to 2024, the SEC sued Coinbase, Binance, Kraken, and Ripple within a year—the Ripple case lasted five years, with the court ultimately ruling that ETF market sales constituted "investment contracts," but secondary market transactions did not , leaving the entire industry confused. During Gensler's tenure, the SEC's cryptocurrency-related enforcement cases resulted in fines and settlements exceeding $10 billion —the biggest blow to the cryptocurrency industry in seven years, and one of the SEC's biggest "revenue engines."

This is why the word "CLARITY" has been on everyone's lips in the crypto world for almost a decade. Clarity, in essence, is about "who governs us, what rules govern us, what constitutes security, what constitutes commodity, and what is illegal and what is legal"—a fundamental question of the "rules of the game." The crypto industry doesn't want to be unregulated; it wants to "at least know what the rules are so I know how to comply."

The bill passed today is officially named the Digital Asset Market Clarity Act (HR 3633). The vote was 15-9 , with two Democratic senators, Ruben Gallego (Arizona) and Angela Alsobrooks (Maryland), voting in favor of the bill. This is a bipartisan victory , not a purely Republican effort. This is important—purely partisan legislation is virtually impossible on the Senate floor; bipartisan votes provide impetus.

But you must remain calm: this is a committee-level approval, not a final approval by both houses of Congress. Alan repeated this three times.

There are still three hurdles to overcome:

The first hurdle: the Senate floor vote . 60 votes are needed to bypass the filibuster. Currently, the Republicans hold 52 seats + 2 bipartisan seats = 54 seats, which is 6-8 votes short of 60. Continued lobbying of moderate Democrats such as Mark Warner, Kirsten Gillibrand, Mark Kelly, and Cory Booker is necessary.

The second hurdle: House renegotiation. The House passed a version of HR 3633 in July 2025 (…).

(294-134 ), but it differs from today's Senate version and requires reconcile.

The third hurdle: Trump's signature. This is the easiest hurdle, but the prerequisite is that the bill cannot contain any ethics provisions targeting the Trump family (the White House has explicitly opposed this).

Polymarket is now betting on a 62% chance of passage by 2026 (up from a peak of 80%, as the banking sector's final lobbying efforts have brought the bill down). Senator Lummis warned that if the window before Memorial Day (May 21) is missed, the bill could be delayed until 2028 or even 2030.

So, Alan says today's victory is "half an answer." But compared to the "zero answer" of the previous seven years, this partial answer is enough to support the market. BTC broke through $82,000 today , Coinbase stock rose +8.2% in a single day , and MSTR rose +7%. — The market cast its vote with real money, declaring that "a half-answer is still an answer."

02. Three-tier classification + "20% threshold" —

With a single, decisive cut, the legal answer to the question of what constitutes a commodity and what constitutes a security is now clear.

Alan says the next part is the core of the bill, and you absolutely must understand it—because it's the legal answer to defining "which coins are what they are." All other details are built upon this one stroke.

CLARITY divides all digital assets into three tiers:

Tier 1: Securities – Regulated by the SEC. This includes tokens in the early stages of fundraising, tokens in the form of investment contracts, and tokens with a clearly defined issuer. This part is similar to traditional securities.

Tier 2: Digital Commodities – Under the jurisdiction of the CFTC. The bill defines them as: "intrinsically linked" to a blockchain, with value derived from the blockchain's own token. Explicitly excluded: securities, derivatives, stablecoins, bank deposits, digital collectibles (NFTs), and digital assets linked to agricultural products.

Tier 3: Stablecoins – A separate framework. Governed by the GENIUS Act of 2025 and its accompanying rules, with the SEC and CFTC sharing responsibility. This is a separate legal microcosm, which will not be elaborated upon here.

But the real killer feature is the second tier of "digital commodity" criteria – the 20% threshold.

The bill stipulates that for a blockchain to reach the "mature" state, it must meet the condition that "no single insider group controls more than 20% of the voting rights or owns more than 20% of the token supply." Once a blockchain is determined to be mature, its token will switch from "securities" jurisdiction to "digital goods" jurisdiction.

I asked, "So, how will this 20% threshold actually affect the existing major cryptocurrencies?"

Alan said:

BTC/ETH : The issue of >20% insiders has long been resolved. Bitcoin has no foundation or team; the Ethereum Foundation, Vitalik, and early investors combined account for far less than 20%. They are directly classified as commodities , without a doubt.

SOL : We need to look at the combined holdings of the Solana Foundation, Anatoly Yakovenko, and early-stage VCs (a16z, Multicoin, etc.). Based on publicly available data, this figure should be around the critical threshold and needs to be reassessed. Slight adjustments to the custody and distribution structure could easily bring it below 20%.

ADA, AVAX, DOT, NEAR : The token distribution of these "foundation-type" projects generally shows a high proportion held by the foundation and early contributors, requiring technical adjustments and disclosure.

For new tokens issued in 2024-2025 : This is the most awkward part—many new tokens initially have more than 30% insider holdings, requiring them to go through an "investment contract asset" transition mechanism. They will first be issued as security tokens, and then switch to commodity tokens through a "maturation" process. The bill allows issuers to submit notices to the SEC stating "I will mature within 4 years," and the SEC has the right to object. This essentially provides a legal "whitewashing channel" for a bunch of ICO projects from 2017-2025.

Another absurd detail: memecoins (DOGE/SHIB/PEPE/BONK) generally pass the 20% threshold because they inherently lack "insider control." Therefore, legally, memecoins suddenly become the cleanest commodity . Serious projects aim to create "decentralization theater," while memecoins are inherently commodities. This irony is unique to the crypto industry.

You think this is just amending the law? This is re-issuing a "birth certificate" for the entire crypto asset universe. Every token needs to have its identity document re-checked.

03. SEC Loses Power, CFTC Takes Over – Washington's Biggest Regulatory Turnover in 7 Years

Alan said that you need to understand the next part from a power perspective. This is the largest internal power redistribution in US financial regulation since the Securities Acts of 1933 and 1934.

Over the past seven years, under Gary Gensler, the SEC has become the biggest rival to the crypto industry. During Gensler's tenure, the SEC's crypto-related enforcement cases have resulted in fines and settlements exceeding $10 billion : $ 1.8 billion in the Telegram case, $125 million in the Ripple case, $4.3 billion in a multi-agency federal settlement with Binance, $30 million in the Kraken staking case, the Coinbase case (before a 2024 settlement), the Bittrex case, the Genesis case, the Celsius case… The SEC has made crypto enforcement one of its biggest revenue centers, and also its most hated adversary in the crypto industry.

The most substantial impact of the CLARITY Act, Alan said, is to shut down the SEC's business.

How exactly do I turn it off?

1. The SEC has lost jurisdiction over the spot market. This area now falls entirely under the CFTC's control. This represents the largest segment of daily crypto trading volume—according to Kaiko data, the global daily trading volume for spot crypto is approximately $150 billion+ .

2. The SEC retains jurisdiction over the primary market (initial fundraising), but faces a new $75M registration exemption. This means that offerings below $75M will go directly through the new channel and will no longer be subject to the old rules of the Securities Act 1933. The SEC's power to "choke" financing for small and medium-sized projects is weakened.

3. The SEC has lost jurisdiction over "mature" tokens. As long as the 20% threshold and other conditions are met, a token can apply for a transition to the CFTC.

4. A new dedicated registration category for Digital Commodity Exchanges (DCE) has been added. Exchanges such as Coinbase, Kraken, and Bitstamp will now register with the CFTC, no longer needing to register with the SEC. The SEC's enforcement tools for exchanges are now ineffective.

5. The CFTC has been granted "exclusive jurisdiction." This is the first time in the CFTC's history that it has obtained exclusive jurisdiction over the spot market. Previously, the CFTC only had full jurisdiction over futures and limited anti-fraud authority over the spot market.

This is the largest shift in regulatory power since the Securities Acts of 1933 and 1934. The Dodd-Frank Act of 2010 involved amendments and expansion of powers; this time, CLARITY involves transferring an entire emerging asset class from the SEC to the CFTC.

Why the CFTC? Alan said, you need to look at political economy.

The CFTC has approximately 700 employees , about one-seventh the size of the SEC. The CFTC has historically been more industry-oriented, having grown up within the culture of the Chicago Mercantile Exchange, and is more supportive of derivatives innovation. The SEC, on the other hand, has always been driven by a culture of consumer protection and enforcement—the two agencies have completely different DNAs. Handing over crypto to the CFTC essentially means handing it over to a smaller, weaker, and more market-oriented regulator.

There's a clear political signal behind this: the Trump administration wants crypto to "be less regulated, more active, and stay" in the US. Section 410 of the bill specifically addresses "resources for implementation and enforcement"—giving the CFTC more resources while simultaneously fostering a culture of "less regulation." This is a clever design of "expanding power but weakening control."

This is the biggest victory for the crypto industry since 2017. The law enforcement agencies left behind by Gensler face an awkward reality: most of the crypto cases in their offices will lose their legal basis. SEC enforcement lawyers will either move to the CFTC or start private law firms—a quiet "reshuffling."

04. BTC / ETH / XRP / SOL – Which coins suddenly gained a "birth certificate"?

Alan pushed his phone towards me, showing me today's top gainers list:

"What you're looking at isn't 'how much it went up today,'" Alan said. "What you're looking at is ' the pricing model in the secondary market after these assets have been legally registered.'" How will it be changed? Specifically for each coin:

BTC : This is the simplest. The SEC has recognized BTC's commodity status since 2014 (as repeatedly emphasized by Hester Peirce). However, administrative determinations can be overturned by the next administration, while statutes cannot. CLARITY has enshrined this determination in law passed by Congress, meaning that no future administration can overturn the notion that "BTC is a commodity" with an executive order. Citi Research has set a 2026 base case target price of $143,000 for BTC, directly linking it to the CLARITY variable. Citi also predicts that the bill's passage will bring an additional $15 billion in net inflows into the spot BTC ETF (currently, the spot BTC ETF has seen daily net inflows exceeding $530 million in May).

ETH : ETH has been in an awkward position for the past few years. Gensler's refusal to explicitly state whether ETH is a security asset has delayed the approval of Ethereum staking ETFs (the SEC approved the pure holding portion but rejected the staking portion). With the approval of CLARITY, ETH is clearly defined as a commodity, and staking is considered part of that commodity attribute , thus removing the legal obstacles to Ethereum staking ETFs. This means that in the next 12-18 months, ETH-staking-yielding ETFs will emerge—products that BlackRock and Fidelity are already queuing for. An ETH ETF offering a 5-7% staking yield is far more attractive to traditional institutional money than a pure holding version.

XRP : From a purely legal certainty perspective, this is the biggest winner. The main point of contention in Ripple's five-year legal battle with the SEC was whether XRP was a security. With the CLARITY approval, XRP is clearly classified as a commodity , allowing Ripple's institutional banking products (ODL, On-Demand Liquidity) to be legitimately marketed. Standard Chartered research predicts a net inflow of $4-8 billion in the first year after the XRP spot ETF is approved. A 24/7 Wall Street analyst gives XRP a short-term price range of $1.65-$1.80 , with a year-end target of $3-$5 . XRP is the biggest single-name winner in this whole affair.

SOL, ADA, AVAX, DOT, NEAR, and ATOM : These "large public blockchain" projects, as long as they meet the 20% threshold, will all belong to the commodity. This means the legal basis for spot ETFs is in place. BlackRock, VanEck, Bitwise, and Fidelity are already in the SEC queue applying for spot ETFs of these coins—now they may directly go through the CFTC channel, bypassing the SEC's "not mature enough" excuse. Alan predicts that in the next 6-12 months, you will see at least 5-8 new spot crypto ETFs approved.

DeFi tokens (UNI / AAVE / MKR / LDO / COMP) : The legal risks of these projects have also been significantly reduced because the protocols themselves are now protected by DeFi developer protection terms (discussed in Section 6). Their market capitalization has collectively jumped 10-20% in the past 48 hours.

Crypto stocks (US stock market) : COIN +8.2% , MSTR +7% , GLXY +6.3% , BMNR +5.6% , and CRCL rebounded to +1.1% after falling 6% in the morning (due to short-term concerns caused by some stablecoin yield restrictions, but recovered during the day). These are all direct beneficiaries of CLARITY.

The "ETF flood" narrative has officially begun. It is projected that over the next 12 months, new inflows into crypto ETFs (BTC + ETH + SOL + XRP combined) will reach $30-50 billion . This is the most significant wave of institutional entry.

The only exception: any recently issued tokens where insiders hold more than 20% of the stock – these will be held up on the security side, requiring a conversion process and thus restricted in the short term. This includes some small-cap projects issued in 2024-2025 and VC-heavy early-stage tokens. These tokens actually face the "side effect of clarification" in the short term – after clarification, they are clearly ineligible.

05. Coinbase, Circle, and a16z are laughing, while the banking industry, SEC enforcement, and privacy advocates are crying.

Alan said that the list of winners and losers is far more important than "which coins are rising." This will influence capital flows, talent flows, and political lobbying budgets over the next three to five years.

Alan explained Coinbase's situation most clearly. Brian Armstrong withdrew his support for gambling in January—he was worried that overly lenient stablecoin yield terms would lead to uncontrollable political pressure—but received concessions in the May version, and Armstrong smiled. COIN, as the largest compliant exchange in the US, will absorb the new institutional clients over the next 3-5 years. Founded in 2012, this company survived the "crypto winter" of 2018-2019, the SEC crackdown of 2022-2023, and the IPO slump of 2024—from today onwards, it enters the comfort zone of a "regulated incumbent."

Circle On the other hand, USDC, as a representative of compliant stablecoins, is protected by both the GENIUS Act (to be passed in 2025) and the CLARITY Act (if passed in 2026), and its market share expansion over the next three years will be very rapid. Although USDT (Tether) is still the world's largest in terms of transaction volume, under the US regulatory framework, USDC will gradually become the institutional default choice. The outcome of this battle will be revealed in three years.

Alan spoke most vehemently about the large banking sector. The strongest opposition wasn't from the SEC, but from the banks themselves. The Bank Policy Institute, the ICBA (Institute of Community Banks), and Senator Mark Warner—this group attempted to stifle the stablecoin yield clause at the last minute. The reason is simple: allowing stablecoin issuers to yield to customers (similar to Yu'ebao) would divert bank deposits. The core business of banks—"borrowing short and lending long"—would be disrupted. This is a true "crypto vs. traditional finance" showdown—and crypto has temporarily won the first round.

The final version made some concessions, but the banks were still not satisfied. In the upcoming Senate floor vote, bank lobbying will return—their goal is to further limit the stablecoin yield in the floor version. This is the most crucial behind-the-scenes battle over the next three weeks.

Alan sneered as he recounted the anti-crypto Dems: "Warren proposed dozens of amendments, Reed proposed 18, and almost all of them were rejected. Van Hollen's Trump conflict of interest amendment was rejected on the grounds that it 'did not fall under banking jurisdiction.' This faction's political capital on the crypto issue is practically zero in the short term. They'll use it again in the 2028 presidential election—but today, they've lost."

06. $75M Fundraising Exemption + Legal Shield for DeFi Developers – Two Underrated Hidden Advantages

Alan says that you only need to listen to the first five sections once. But you should pay special attention to this next section—because it contains two "underrated" provisions in the bill that will reshape the entire crypto industry structure over the next 3-5 years.

Clause 1: $75M Fundraising Waiver

The bill grants digital commodity issuers a new Securities Act 1933 exemption—allowing them to sell for up to 12 months . Tokens up to $75 million do not require SEC registration, but must meet disclosure and eligibility requirements. Disclosure requirements include: maturity status, source code, token economics, risk factors, and insider holdings.

This is crypto-native's "ICO 2.0" . Alan says you'll understand if you compare it to existing fundraising channels:

• Traditional Reg A+ (small public offering) : $75M cap, requires mini-IPO level preparation, 12+ months for approval, legal fees $200-500K+ .

• Reg CF (crowdfunding) : $5M cap, suitable for small projects, low threshold for approval, but the amount is too small.

• Reg D Rule 506 (c) (private placement) : No limit on the amount, but it can only be issued to accredited investors, and ordinary retail investors are excluded.

• Current ICOs : The legal status is ambiguous, and most dare not enter the US market.

The new $75M exemption is the first "crypto-tailored" crowdfunding channel designed for crypto natives—allowing ordinary retail investors to participate (breaking through Reg D restrictions), while having a clear compliance framework (breaking through ICO ambiguity), and a large enough limit (much wider than Reg CF's $5M).

Prediction: In the next 18 months , there will be a second wave of project fundraising similar to the 2017-2018 ICO boom , but this time it will be "compliant ICOs." Alan estimates that the total amount of funding raised through this channel could reach $ 5-10 billion per year by 2027.

Clause Two: Legal Shield for DeFi Developers (Article 409)

This is the part that Alan is most excited about. Section 409 of the bill is titled "Exclusion for decentralized finance activities"—an exemption for decentralized finance activities.

Specifically: Software developers who develop blockchain protocols or smart contracts, and who do not exercise unilateral control over user funds , are not considered money transmitters, do not need to register under the Bank Secrecy Act, and are not subject to prosecution as unregistered broker-dealers.

This is the biggest legal shadow over DeFi in the past 7 years—the sword of "whether they will be sued as unregistered money transmitters" has been hanging over the heads of Uniswap founder Hayden Adams, Aave founder Stani Kulechov, and Compound founder Robert Leshner. The lawsuit against Tornado Cash's two developers, Roman Storm and Roman Semenov, sent chills down the spines of the entire DeFi developer community —many US DeFi projects have since registered their development entities in Switzerland, the British Virgin Islands, and Cayman.

Once Section 409 was passed, the sword was removed.

There is another clause that is almost always overlooked: bankruptcy code update . The bill requires updating the bankruptcy law to provide a clear treatment for client funds held by DCE—avoiding tragedies like FTX's, where "client funds and company funds were commingled, and clients became unsecured creditors in bankruptcy."

This clause is perhaps more important than any headline news for institutional adoption of crypto. The biggest legal concern for institutional clients entering the crypto space is counterparty risk – what happens to my money if the exchange goes bankrupt? With this clause, the legal barriers for large hedge funds, family offices, and insurance funds to enter the crypto space will be halved .

Alan says these three things— the 75M exemption, DeFi Shield, and updated bankruptcy law — will combine to make 2026-2028 the best three years for US-based crypto startups. It's even more powerful than the 2017-2018 wave because this time there's a "birth certificate."

07. The US has made its decision, but what about Asia and Europe? – The awkward situation of Hong Kong, Singapore, and the EU's MiCA.

Alan said that the international implications of this matter have not been fully discussed in the past 24 hours. But this is the bigger picture.

Background: From 2018 to 2025, the global crypto regulatory landscape has been in a state of "if the US can't do it, everyone goes abroad." Hong Kong, Singapore, Dubai, Switzerland, the European Union (MiCA), the UK, and Japan—each jurisdiction is trying to attract capital and talent leaving the US with more favorable regulations.

Now it's clear to the US. This game needs a complete reshuffle.

• Hong Kong (SFC) : Since 2023, the SFC has been implementing a licensing system for VATP (Virtual Asset Trading Platforms), issuing licenses to a few companies such as HashKey and OSL. Hong Kong's strategy was "the US is chaotic, we are clear, and capital and talent will come to us." Starting today, this strategy has failed. The clarity of the US market, coupled with the depth of its capital markets, the dollar system, and its pool of tech talent—Hong Kong is at a disadvantage in every aspect. Hong Kong must lower compliance thresholds, expedite license approvals, and expand the range of tradable currencies to maintain its competitiveness. Prediction: Hong Kong's Web3 narrative will face a major policy readjustment in the second half of 2026.

• Singapore (MAS) : MAS's Payment Services Act (2019) and Major Payment Institution licensing have made it the most popular cryptocurrency regulator in Asia in recent years. Binance, Coinbase, and Crypto.com all have significant operations in Singapore. However, MAS has become increasingly conservative in its stance on retail cryptocurrency trading since the collapse of Three Arrows Capital in 2022, prompting capital to shift eastward to Dubai and westward to the United States. With the passage of CLARITY, MAS's relative attractiveness has further declined.

• The European Union (MiCA) : MiCA (implemented in 2024) is the world's first comprehensive cryptocurrency regulatory framework, often referred to as the "GDPR of cryptocurrency regulation." However, MiCA imposes extremely strict restrictions on stablecoins: 1:1 fiat currency reserves , no yield, a cap on the issuance of a single coin, and stringent capital requirements. Under the US's GENIUS + CLARITY combination, stablecoin issuers in the US may be able to offer yields (the terms are not yet fully finalized, but are more lenient than MiCA). This means that major issuers like Circle, Paxos, and Tether will further gravitate towards US regulation. The stablecoin market that MiCA originally aimed to capture may instead be siphoned off to the US. MiCA has gone from "first come, first served" to "overly strict"—a fact that European regulators are most reluctant to admit.

• UK (FCA + BoE) : The UK began pushing for crypto regulation in 2023, but the Bank of England's restrictions on stablecoins ( 100% reserve of government bonds, no yield) have been criticized by the industry as "anti-market." From today onwards, the UK's version of crypto regulation appears even more awkward—the trend of talent flowing to the US and Dubai will accelerate.

• Japan (FSA) : Japan was one of the first Asian countries to enact legislation (Payment Services Act of 2017, Financial Instruments and Exchange Act for STOs of 2020). Japan has a deep-rooted crypto culture (its daily BTC trading volume has long been the highest in Asia), but its regulation is relatively conservative (exchange licenses are difficult to obtain, and token list reviews are strict). Japan will likely observe the implementation of the US legislation and selectively adjust its own rules accordingly. It is expected to follow the trend rather than lead it.

• The UAE (Dubai VARA + Abu Dhabi ADGM) : Dubai's "crypto paradise" narrative over the past two years relied in part on the "chaotic America, clear and friendly China" narrative. Starting today, this narrative is half-dead. However, Dubai's real appeal ( 0% personal income tax , free flow of cross-border capital, English-speaking environment, and geographical location) remains. Dubai is expected to continue attracting talent from the crypto trader and small hedge fund levels, but mega-institutional money will likely flow back to the US.

• Mainland China + Hong Kong : Mainland China's cryptocurrency policies have been essentially shut down after two bans in 2017 and 2021. Hong Kong's role as a testing ground will be awkward due to the return of US capital. However, on a larger scale, the legal certainty of USD stablecoins (USDC, USDT, and PYUSD combined have a market capitalization of over $300 billion , 99% of which is USD-pegged) further strengthens the global digital projection of the US dollar. The window for promoting e-CNY (digital yuan) overseas has been further compressed—because the US dollar stablecoin is already compliant, custodial, and institutionalizable, while e-CNY is still in the bilateral pilot stage. The geopolitical implications of this event are far more profound than any cryptocurrency price fluctuation.

• South Korea : South Korea is one of the world's most active retail crypto markets (South Korean domestic exchanges consistently accounted for 5-8% of global crypto trading volume in 2024). However, its regulation is conservative (single license system, strict KYC, and stringent tax laws). South Korea will likely follow Japan's lead, observing and gradually adjusting its approach.

08. Tornado Cash vulnerability, Trump's conflict of interest, and the 60-vote ceiling.

This game is far from over.

Alan put down his phone, looked at me, and said, "You think it's over for today? No, this is just the end of the first half. The second half has five risks, and I'll tell you about them one by one."

• Risk 1: The 60-vote ceiling (Senate Floor Vote)

The bill needs 60 votes to bypass the filibuster. Today, the committee passed it 15-9, but the Senate has 100 members. Republicans currently hold 52 seats, plus the bipartisan Gallego and Alsobrooks , making 54. They are 6-8 votes short of 60. Memorial Day recess is on May 21st. If it cannot pass on the floor before Memorial Day, it will face a congressional recess, with a window opening in the fall. Lummis warns: if it misses, the bill could be delayed until 2028 or even 2030.

The crypto industry is about to engage in a "floor whip operation"—winning over the remaining Dem moderates, vote by vote: Mark Warner (VA), Kirsten Gillibrand (NY), Mark Kelly (AZ), Cory Booker (NJ), John Fetterman (PA), and Catherine Cortez Masto (NV). Each vote requires concessions. The political lobbying budgets for a16z, Coinbase, and Circle over the next three weeks will reach record highs.

• Risk 2: Trump's Conflict of Interest (Ethics Provisions)

This is the most dangerous reef of the bill. Trump and his family's current crypto interests include:

- $TRUMP memecoin (issued in January 2025, peak market capitalization of $50 billion, currently around $5 billion)

- $MELANIA memecoin (issued at the same time, currently around $500 million)

World Liberty Financial (WLFI) – A DeFi project in which the Trump family holds a 25% stake.

Eric Trump and Don Jr. serve as advisors/shareholders in multiple crypto ventures.

- Bitcoin Strategic Reserve (established by Trump's executive order in 2025)

Trump Media's BTC Purchase Plan

Democratic senators requested the bill include a conflict-of-interest clause to prohibit senior government officials (including the president, vice president, senators, and representatives) from profiting from the crypto industry. Van Hollen's amendment was rejected today due to "jurisdiction issues." However, Gillibrand stated clearly at Consensus Miami 2026 that "a version without an ethics provision will not pass the Senate floor." The White House strongly opposes any provisions "targeting the president and his family."

This is where the bill is most likely to die on the floor. Crypto industry supporters privately hope the Trump family will back down—but Trump never will.

• Risk 3: AML/Tornado Cash Vulnerability

On May 14, the same day, Minority staff released a National Security Advisory detailing six types of threats . The core argument was that the bill "failed to close known illicit financial vulnerabilities."

Mixers like Tornado Cash were not included in the stricter sanctions;

- Overseas users can use stablecoin to bypass US sanctions evasion;

Drug cartels (CJNG and Sinaloa in Mexico) are increasingly using cryptocurrencies for money laundering;

- Terrorist organizations (Hamas, ISIS, Hezbollah) use crypto for financing;

- Rogue state (North Korea's Lazarus Group stole over $1.5 billion through crypto in 2024, funding nuclear weapons);

- Child exploitation, ransomware, ransomware attacks.

These points will be repeatedly raised in floor debates. The crypto industry needs to make concessions on AML language in order to gain more DeFi votes. But with each concession, DeFi developer protection and self-custody rights are eroded a little. It's a zero-sum exchange.

• Risk 4: House Reconciliation

The House passed a version in July 2025 ( 294-134 , bipartisan). The Senate version differs from the House version—particularly on stablecoin yield, the definition of DeFi, and CFTC resource allocation. The two chambers' texts must be reconciled, and then both sides will vote again. This process involves another two to three months of time and political maneuvering.

• Risk 5: Implementation

Even with Trump's signature, the enforcement of most provisions of the bill relies on rulemaking by the CFTC and SEC. The CFTC will need to draft, publicly solicit opinions on, and finalize a series of detailed rules within 12-18 months of the bill's passage—rules for digital commodity exchange registration, custodians, brokers/dealers, disclosure, and a new $75M exemption rule, among others. Full implementation is expected in the second half of 2027 to 2028.

Therefore, there is still a practical gap of 18-24 months between "CLARITY approval" and "crypto being actually regulated." During this period, the industry is still in a transitional phase where "the law has been written, but it is not yet actually in operation."

I asked Alan, "Overall, do you think this is a good thing or a bad thing?"

He finished the last sip of cold brew, remained silent for 10 seconds, and then said:

Alan put on his jacket and walked to the door. The California Ave sunlight shone directly on his back. He turned back and smiled at me:

"Remember to write out all eight sections; everyone in the circle who needs to know, should know."