The US crypto market still hasn’t gotten the legislative breakthrough it was hoping for.
On September 15, the Senate failed to advance the CLARITY Act in a 49–50 procedural vote. The bill needed 60 votes, leaving the proposed market-structure framework in political limbo. It was a setback for the crypto industry, but it didn’t stop US regulators from building rules around banks, stablecoins and digital-asset services.
The split matters: Congress has paused the broad market-structure debate, while the Federal Reserve and other agencies continue working within existing law.
What the CLARITY Act Could Have Changed for Banks
The Senate version of the CLARITY Act attracted attention because it could have expanded the range of crypto activities available to US banks, credit unions and other banking organisations.
A Congressional Research Service report identified 11 categories of digital-asset activity that could become permissible under the Senate proposal. These included digital-asset underwriting and dealing, custody, lending secured by digital assets and certain secondary-market services for clients.
The importance of the bill was not limited to adding new products. It could have changed the legal basis on which banks participate in crypto. Instead of forcing banks to rely on narrow interpretations, case-by-case approvals or separate subsidiaries, the Senate version would have treated a broader group of digital-asset services as part of, or incidental to, the business of banking.
That would have created a clearer path for banks to compete with crypto exchanges, custodians and fintech companies.
Why the Senate Vote Failed
The failed vote was not simply a disagreement over whether banks should be allowed to hold or trade digital assets.
Democratic senators raised concerns about ethics rules and President Donald Trump’s financial involvement in crypto. Some lawmakers argued that the bill needed stronger restrictions to prevent political officeholders and their families from benefiting from a new regulatory framework.
Other concerns focused on stablecoin rewards, consumer protection and the division of authority between federal regulators and the states. Banking groups warned that stablecoin rewards could compete with traditional deposit products, potentially affecting the deposits banks use to support lending.
The vote therefore became a test of both crypto policy and political trust. The failure to reach 60 votes does not permanently kill the CLARITY Act, but it makes a quick compromise less likely.
Stablecoin Regulation Is Moving on a Separate Track
While the CLARITY Act has stalled, stablecoin regulation is progressing through the GENIUS Act framework.
On September 24, the Federal Reserve proposed rules covering payment stablecoin issuers under its supervision. The proposals address reserve backing, capital requirements, risk management and the process for bank holding companies that want to establish subsidiaries or affiliates to issue payment stablecoins.
The Federal Register published further details on September 29. The rules would require permitted issuers to maintain appropriate reserves, follow compliance standards and provide information to regulators. They would also clarify how certain stablecoin-related activities may be conducted by banks supervised by the Federal Reserve.
This creates an unusual situation. The United States still lacks a complete framework for the wider crypto market, but one of the most important parts of that market, stablecoins, is moving ahead under a separate legislative and regulatory process.
What Banks Can and Cannot Do Right Now
The CLARITY Act’s failure does not remove all existing paths for banks to participate in crypto.
Banks may still be able to provide certain services under existing banking rules, provided that they meet requirements covering anti-money laundering, customer identification, sanctions compliance, transaction monitoring and suspicious activity reporting. The challenge is that the permitted scope can depend on the bank’s charter, regulator and specific business model.
That uncertainty is precisely what the CLARITY Act was designed to reduce.
A bank may be able to offer digital-asset custody but face additional restrictions when it wants to trade assets, provide loans secured by tokens or act as a broker. It may also need to separate certain activities through an affiliate or obtain additional regulatory approval.
This creates a competitive advantage for larger institutions with legal, compliance and technology teams. Smaller banks may find it more difficult to enter the market while the rules remain fragmented.
House and Senate Versions Take Different Approaches
The House and Senate proposals do not treat bank crypto activity in the same way.
The House version would allow banks to use blockchain and digital assets for activities they are already legally permitted to conduct. It would also place some crypto services inside non-bank subsidiaries of financial holding companies.
The Senate version is broader. According to the Congressional Research Service, it would permit 11 categories of crypto activity for banking organisations and credit unions without relying on the same distinction between traditional banking activities and activities considered financial in nature.
That difference could become central in future negotiations. The House approach gives regulators more room to interpret existing powers, while the Senate proposal seeks to define specific digital-asset permissions in the statute itself.
Why This Matters for the Crypto Market
A clear banking framework could reshape crypto market structure in several ways.
Banks could provide custody and settlement services to institutional investors. They could also become more active in tokenised assets, digital-asset lending and stablecoin payments. That would bring crypto closer to the existing financial system and potentially improve access for businesses that are not comfortable working with offshore exchanges or lightly regulated providers.
However, bank involvement would not remove volatility or investment risk. A more regulated market can still experience failed projects, illiquid tokens and sharp price movements. Regulation changes the rules around market participation; it does not guarantee the quality of every asset traded within the system.
The market could also become more concentrated. Large banks and major financial institutions may be better positioned to meet new compliance and capital requirements, leaving smaller companies with fewer ways to compete.
The Bottom Line
The CLARITY Act’s failure to advance is a setback, but it does not mean US crypto regulation has stopped.
The Senate proposal showed how far bank crypto permissions could eventually go, including custody, trading, underwriting and digital-asset lending. For now, those broader permissions remain uncertain. At the same time, stablecoin regulation is moving forward under the GENIUS Act, with the Federal Reserve already proposing rules for supervised issuers and bank-related activities.
That leaves the US market in a transitional phase. Banks have more opportunities than they did a few years ago, but the legal framework is still incomplete. Until Congress agrees on a durable market-structure law, crypto businesses and financial institutions will continue operating across a patchwork of statutes, agency rules and supervisory interpretations.
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Frequently Asked Questions
What is the CLARITY Act?
The CLARITY Act is proposed US legislation designed to create a broader regulatory framework for digital assets. It addresses issues such as market structure, regulatory responsibilities and the treatment of crypto businesses.
Did the CLARITY Act pass the Senate?
No. The Senate failed to advance the bill in a September 15, 2026 procedural vote. The vote was 49–50, below the 60 votes needed to proceed.
What crypto activities could the Senate version allow banks to conduct?
The Senate version could permit banks and credit unions to engage in a wider range of digital-asset activities, including custody, trading, underwriting, digital-asset lending and selected secondary-market services.
