Bitcoin could remain in a period of regulatory uncertainty after the CLARITY Act failed to move forward in the U.S. Senate. However, the setback has not changed Bitcoin’s current classification as a digital commodity.
The Senate rejected a cloture motion for H.R. 3633 on Sept. 15 by 49 votes to 50, with one senator not voting. The motion needed 60 votes, so lawmakers never reached the amendment stage or a final vote on the bill.
The main impact is that the bill’s proposed federal framework for crypto spot markets has been delayed. Bitcoin’s current treatment still depends partly on how the SEC and CFTC interpret existing laws and their authority.
Bitcoin is in a different position from many other parts of the crypto market. The SEC and CFTC’s March 17 joint interpretation placed Bitcoin among digital commodities, along with assets such as Ether, Solana and XRP. That interpretation is still in place.
However, the classification is based on an agency interpretation rather than a new federal law. It also does not completely remove the possibility of securities laws applying, depending on how a crypto asset is offered or sold.
This means the failed CLARITY Act vote does not immediately change Bitcoin’s classification. Instead, it leaves the larger question of how exchanges, brokers and other market participants should be regulated unresolved.
The House version of the CLARITY Act would have required digital commodity exchanges, brokers and dealers to register with the CFTC. It also would have given the CFTC a stronger role in supervising digital commodity spot markets.
Without the bill becoming law, the CFTC still does not have full statutory authority over the entire digital commodity spot market. Bitcoin remains treated as a commodity, but the broader regulatory system around its trading is still unfinished.
Another issue is that the current Bitcoin classification could potentially change in the future. Bitplanet noted that the SEC and CFTC interpretation is not a statute or binding regulation. BlackRock has also pointed to the possibility that a future administration or court could take a different view.
SEC Chair Paul Atkins has said legislation is needed to prevent future regulators from reversing current crypto policy.
The CLARITY Act was intended to put the digital commodity category into federal law and create clearer rules for spot markets. Since the Senate vote failed, Bitcoin will continue operating under the current agency framework while lawmakers decide whether to bring the legislation back.
The market reaction to the failed vote was noticeable but did not last.
On Sept. 15, the 12 U.S. spot Bitcoin ETFs recorded about $450.4 million in combined net outflows. Fidelity’s FBTC saw $214.8 million leave the fund, while BlackRock’s IBIT recorded $161.7 million in withdrawals.
Bitcoin also dropped from around $78,316 to $75,663, a decline of about 3.39%. Coinbase fell 10.10% and Circle dropped 11.41% during the same session.
However, the move cannot be linked entirely to the CLARITY Act vote. The Federal Reserve was also holding its September meeting, while interest rates and oil prices were influencing markets at the same time.
Selling pressure later eased. Bitcoin recovered to $80,890 on Sept. 18, while spot Bitcoin ETFs recorded $159.5 million in inflows on Sept. 17 and another $433 million the following day.
Bitcoin then continued higher, moving above $86,000 and briefly reaching $87,000 on Sept. 22. Falling oil prices, lower Treasury yields, short covering and renewed institutional demand were among the factors supporting the recovery.
ETF activity remains something to watch. Even with the recent inflows, the four trading sessions from Sept. 15 to Sept. 18 still produced a combined net outflow of about $153.8 million.
With Congress still working on crypto legislation, the SEC and CFTC are continuing to develop rules under their existing authority.
CFTC Chairman Michael Selig said in August that staff had been asked to review a crypto market structure rule that could move forward under existing legal powers. On Sept. 17, the White House Office of Information and Regulatory Affairs received the CFTC’s proposal covering crypto asset transactions and markets. At the time of Bitplanet’s report, the proposal was still in the early stage and its details had not been made public.
The SEC also introduced a five-year Innovation Exemption on Sept. 17 for certain tokenized stock trading platforms and liquidity providers.
The exemption allows qualifying venues to support trading in tokenized U.S. stocks through certain automated market makers and liquidity pools, subject to specific conditions.
Bitcoin could also have a role in some of these markets. Bitplanet said trading pairs involving eligible tokenized stocks and non-security crypto assets such as BTC could fall within the exemption.
Still, the measure does not change Bitcoin’s classification or give the CFTC full control over the spot Bitcoin market.
Congress may still return to the CLARITY Act. Sen. Thom Tillis voted against the Sept. 15 cloture motion in a way that allowed him to file a motion to reconsider, and he requested reconsideration after the vote.
Any new attempt to move the bill forward would still need 60 Senate votes.
