The Senate on Tuesday fell short of the 60 votes needed to advance the latest version of the CLARITY Act.
asserted
Senate → fall → Act
The bill now returns to negotiations rather than moving forward on the Senate floor.
asserted
bill → return → floor
That is a delay, not a defeat, and it hands the Senate something it did not have last week: time to get the text right.
asserted
text → hand → something
One major issue still remains unresolved.
asserted
issue → remain → ?
As written, the act does not provide a transition rule for digital asset transactions that have already taken place under the existing legal framework.
asserted
that → write → framework
Congress now has the time to fix that using a framework it has already enacted once before: the LIBOR Act.
asserted
it → have → framework
Landmark financial legislation often changes substantially before final passage, and the version of CLARITY that ultimately becomes law has not yet been written.
asserted
that → change → CLARITY
That next draft may be the Senate’s best opportunity to address the legal uncertainty surrounding past digital asset transactions before the new framework takes effect.
uncertain
framework → address → effect
The CLARITY Act provides much of what the digital asset industry has been seeking for a long time, such as a clear definition of digital commodities, a jurisdictional line between the Securities and Exchange Commission and the Commodity Futures Trading Commission, and registration categories that reflect how tokens are currently traded.
asserted
tokens → provide → Commission
But the framework is entirely forward-looking.
asserted
framework → look → ?
The bill sets the new rules of the road for the future of the digital assets ecosystem, but leaves unresolved what happens to transactions that occurred before those rules existed.
asserted
rules → set → transactions
This reality would expose major companies and market participants to private lawsuits using the regulatory framework that Congress is now in the process of replacing.
asserted
Congress → expose → process
Congress has faced a similar roadblock before.
asserted
Congress → face → roadblock
The Adjustable Interest Rate Act, enacted in 2022 as Division U of that year’s Consolidated Appropriations Act, paired a statutory transition process for legacy contracts with an express liability safe harbor in Section 105.
asserted
Act → enact → Section
That safe harbor protected parties who followed the statute’s transition rules from being sued over the switch itself.
asserted
who → protect → switch
Fraud claims and other misconduct claims stayed fully intact.
uncertain
claims → stay → ?
The bill passed with bipartisan support, ending years of regulator warnings about “tough legacy” contracts.
asserted
bill → pass → contracts
The Stanford Securities Class Action Clearinghouse reports 103 federally filed crypto-related securities class action lawsuits, many of which claim that the sale of tokens on U.S.-based exchanges constituted the sale of an unregistered security.
uncertain
sale → report → security
Coinbase and Kraken continue to be named defendants in private lawsuits based on the same theory, even though the SEC has abandoned its own registration-based lawsuits against the exchanges as part of its broader retreat from enforcement-based regulation.
asserted
SEC → continue → regulation
That gap is ultimately what the CLARITY Act leaves standing unless Congress closes it.
asserted
Congress → leave → it
Clean slate language would have a similar effect on legacy digital asset transactions as Section 105 had on legacy LIBOR contracts.
asserted
Section → have → contracts
Both are forward-looking laws that provide clarity on the treatment of prior events, and neither affects issuers’ liability for their own offerings nor agencies’ authority to enforce compliance with securities laws.
asserted
neither → look → laws
The primary difference is that clean slate language addresses private litigation.
asserted
language → address → litigation
This type of litigation is based on registration requirements related to secondary token trading.
asserted
type → base → trading
Clean slate language would eliminate these lawsuits for all token trades that occurred before the CLARITY Act’s effective date.
asserted
that → eliminate → date
Some may call this a clean slate for bad actors, but that’s not the case.
uncertain
that → call → actors
Clean slate language will apply only to registration-based claims related to secondary-market purchases through publicly traded exchanges.
uncertain
language → apply → exchanges
The clean slate language will not affect fraud, manipulation, or deceit claims, nor will it affect issuers’ responsibility for their own offerings.
uncertain
it → affect → offerings
The clean slate language will not change the SEC’s and CFTC’s authority to enforce either.
asserted
language → change → authority
The intent of the clean slate language is to stop private plaintiffs from filing lawsuits years after an amended law has taken effect.
asserted
law → stop → effect
More than one-fifth of the U.S. adult population currently owns a digital asset.
asserted
fifth → own → asset
However, for years, many have participated in digital asset markets without the same level of regulatory clarity available in financial markets worldwide.
asserted
many → participate → markets
The primary roadblocks are that there are no regulations regarding custody, and there is no clear distinction between security and commodity.
asserted
roadblocks → be → security
This uncertainty has pushed much of the crypto market out of the country and into foreign markets.
asserted
uncertainty → push → markets
As a result, U.S. citizens who use these types of exchanges or platforms have fewer rights and remedies available to them if something goes wrong.
asserted
something → use → them
Only 12% of the top 10 centralized exchanges by market share are U.S.-based, while the U.S. captured just 2% to 5% of CEX volume growth between 2024 and 2025.
asserted
U.S. → capture → 2024
This geographical shift isn’t limited to exchange volume.
asserted
shift → limit → volume
Over 80% of cryptocurrency developers now live outside the U.S., showing how much of the crypto industry’s development happens internationally.
asserted
much → live → development
So far, Senators working on the CLARITY Act have concentrated on the bill’s more controversial aspects (ethics restrictions, stablecoin rewards, illicit finance protections).
asserted
Senators → work → aspects
Each of these areas has constituencies pushing for their priorities.
asserted
Each → have → priorities
…and 11 more, not listed.
The Aporia
