Those keeping tabs on the digital currency space might have concluded that regulatory guidelines were close to becoming reality in the United States. The forward progress of the GENIUS Act gave that impression at one point.
However, the CLARITY Act, the GENIUS Act’s companion bill, has faced hurdles after its bipartisan approval by the House in July, evidenced by a 294-134 vote.
What’s causing the delay?
Beyond the existence of a competing proposal, the Responsible Financial Innovation Act (RFIA), put forth by the Senate Banking Committee and emphasizing stronger Securities and Exchange Commission (SEC) oversight, the primary obstacle for the CLARITY Act lies in the fact that the Commodity Futures Trading Commission (CFTC) is still awaiting Senate confirmation of its chairperson.
Successful enactment of the CLARITY Act, a cornerstone of Donald Trump’s pledge to position the U.S. as the global “crypto capital,” necessitates strong leadership at the CFTC. However, with the chairman not yet confirmed, the agency is operating with limitations, potentially lacking a quorum or even basic leadership at a time of significant regulatory transition.
Brian Quintenz, Trump’s selection for the role, has faced opposition from influential crypto executives, reportedly delaying his appointment.
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Senate committees are under pressure to approve the CLARITY Act before year-end, partly due to potential shifts in the political landscape after upcoming elections. Delaying action into 2026 could complicate the passage of crypto market legislation.
In the global crypto sector, consistency is crucial. Investors, institutions, and digital asset exchanges operate beyond domestic borders. Regulatory arbitrage is always a factor; companies will strategically locate, list, or structure their offerings in jurisdictions with clearer and more favorable regulations.
Uncertainty in the U.S. particularly disadvantages issuers, hindering activity in one of the world’s most robust markets while other major areas, such as the European Union, are establishing their own precedents for cryptocurrency market regulations.
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Why Issuer Definitions Matter
The European Union’s pivotal Markets in Crypto-Assets Act (MiCA) framework, finalized and enacted, was hailed as the first significant effort by a leading jurisdiction to create a legal framework for crypto assets. The focus was less about setting specific technological limits and more about assigning responsibility. A central question for regulators was defining exactly who qualifies as the “issuer” of a crypto asset.
This definition matters because it establishes liability, disclosure obligations, and potential enforcement actions.
Identifying issuers is straightforward in the equities market; corporations register with regulators, list shares, and provide required disclosures. It’s more complex in the crypto world. Sometimes a startup creates tokens to fund its business. At other times, a decentralized community collaborates to build an open-source protocol where no single entity can be definitively considered in charge. Sometimes a consortium manages a digital asset, with multiple actors holding the keys.
MiCA, now implemented or in final stages by EU bodies, legally clarifies the previously ambiguous question of who bears responsibility for tokens and crypto assets.
MiCA categorizes crypto assets into e-money tokens (EMTs), asset-referenced tokens (ARTs), and other crypto assets (OCAs). It regulates issuances, public offers, trading admissions, and sets rules for service providers and market abuse.
Importantly, MiCA’s definitions are based on control by identifiable issuers, not simply on the technical aspects of issuance. For example, decentralized protocols lacking identifiable issuers may be exempt from certain rules; centralized entities controlling minting, distribution, and governance are clearly subject to them.
The framework distinguishes between “issuance” as a technical process and “issuance” as a function of control. Physically creating tokens is less important than holding the levers of administration or governance that influence a token’s economics.
This is particularly relevant for stablecoins, where maintaining price stability depends on reserves managed by a corporate entity. MiCA requires issuers of “asset-referenced tokens” or “e-money tokens” to adhere to banking-like regulations, emphasizing control over the technical token creation process.
Further Reading: From Ledgers to Layers: The Enterprise CFO’s Blockchain Map
CLARITY Act and ‘Mature Blockchain’
The U.S. is still defining what constitutes a crypto issuer. The SEC has often applied the Howey Test, classifying many tokens as securities. However, Congress has begun to offer legislative clarity.
The CLARITY Act proposes the concept of a “mature blockchain.” This framework specifies that an asset is no longer associated with an “issuer” after it meets certain criteria relating to control, value, and ownership.
While these distinctions might seem like legal minutiae, the definition of “issuer” significantly impacts companies evaluating blockchain applications, including supply chain tracking, loyalty programs, or digital assets.
Senate negotiations are ongoing, with both the agriculture and banking committees aiming to meet a September timeline established by White House AI and Crypto Advisor David Sacks, alongside Senators Tim Scott and Cynthia Lummis. The industry and the administration aim to avoid pushing the decision to 2026, where the midterm elections could make enacting major legislation even more difficult.
A confirmed CFTC chair is considered vital for the act’s successful implementation.
Industry sentiment strongly favors Quintenz, with seven crypto organizations in D.C. sending a letter to President Trump in late August, emphasizing their “strong support for your nomination of Mr. Brian Quintenz … and the need for his expeditious confirmation by the United States Senate.” However, Bloomberg recently reported that the White House is considering other candidates.
Last Friday, a group of Democratic senators issued a framework for market structure, advocating for “commissioners from both parties to be seated at the SEC and CFTC to create a quorum for digital asset rulemakings.” It also stated, “President Trump has fired countless Democratic commissioners from independent regulatory agencies and shown little interest in nominating new officials.”