The U.S. crypto market still hasn’t gotten the regulatory framework it was waiting for.
On September 15, the Senate failed to advance the CLARITY Act in a 49–50 procedural vote. It needed 60 votes, leaving its future uncertain as lawmakers turn toward the midterm elections. Axios reported the setback was closely tied to disagreements over President Donald Trump’s crypto interests, stablecoin rewards, and the bill’s broader structure.
The vote was a political setback. But for BitGo CEO Mike Belshe, the bigger issue is structural. He worries that crypto platforms are combining too many financial functions under one roof without a clear federal framework for separating them.
The Problem Is Bigger Than One Failed Vote
The CLARITY Act was designed to establish a clearer market structure for digital assets. Among other things, it would have helped define the roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission, distinguish securities from digital commodities, and set rules for exchanges, brokers and custodians.
Its failure does not mean that U.S. crypto companies can operate without rules. Existing securities, commodities, banking, anti-money-laundering and state-level requirements still apply.
What remains unresolved is how these rules fit together.
The result is a market where companies may face different obligations depending on the service they provide, the state in which they operate and the regulator claiming jurisdiction. That uncertainty is expensive for businesses and difficult for customers to understand.
It also creates room for platforms to expand faster than the regulatory framework around them.
Why Mike Belshe Is Worried About “One-Stop” Crypto Platforms
Crypto companies increasingly want to offer the complete financial stack: trading, brokerage, custody, settlement, lending and derivatives.
For users, the appeal is obvious. One account is easier to manage than several accounts spread across different providers. Moving collateral between products is faster, and platforms can offer a more integrated experience.
The trade-off is concentration.
If the same company executes trades, acts as an intermediary, holds customer assets and manages settlement, a single operational failure could affect several parts of the customer relationship at once. A cyberattack might disrupt both trading and withdrawals. A liquidity problem could affect access to the market and the ability to retrieve assets. A bankruptcy could create uncertainty over which customers have priority over pooled assets.
Belshe has compared this type of concentration risk with the counterparty problems that made the collapse of Lehman Brothers so damaging. The comparison does not mean a crypto exchange failure would automatically replicate the 2008 financial crisis. It highlights the danger of allowing one institution to become deeply embedded in multiple market functions without adequate safeguards.
Custody Is the Critical Question
The debate ultimately comes back to custody.
In traditional finance, trading, clearing, settlement and custody are often handled by different entities. That separation can create additional costs, but it also limits the damage caused by the failure of one company.
Crypto markets work differently because control of private keys is directly connected to ownership. If a platform holds the keys, customers depend on its legal structure, internal controls, wallet security and withdrawal policies.
That makes basic questions especially important:
-
Are customer assets held separately from company funds?
-
Can the platform lend, rehypothecate or otherwise use those assets?
-
Who controls the private keys?
-
What happens to withdrawals if trading systems are suspended?
-
Does the company provide independent proof of reserves or liabilities?
The CLARITY Act would not have eliminated every custody risk, but it could have provided a federal framework for how intermediaries manage customer assets and disclose their activities.
What Happens While Congress Is Stuck?
The immediate fallback is regulatory action by the SEC and CFTC.
BitGo’s own analysis notes that the CFTC is working on a market-structure regime under existing authority, while the SEC has released a “Regulation Crypto Assets” proposal for public comment through October 20.
These actions may provide guidance in the short term. They cannot fully replace legislation.
Agency rules can be changed by a future administration, challenged in court or interpreted differently by the next group of regulators. A law passed by Congress is more durable and can establish a consistent framework across jurisdictions.
That is why the market is now watching two timelines at once: the regulatory proposals being developed by agencies and the political timetable after the November elections.
The bill could return during a lame-duck session, although the window is narrow. It could also be rewritten and reintroduced in 2027. The final outcome will depend on election results, negotiations over ethics provisions and whether lawmakers can agree on the role of banks, stablecoins and DeFi platforms.
What the Delay Means for Crypto Traders
The failed vote does not require traders to immediately change every position, but it does reinforce the role of regulatory uncertainty in the U.S. crypto market.
Companies may delay launching certain products in the United States while they wait for clearer rules. Exchanges and brokers could also face higher compliance costs, which may reduce access to some tokens or services. Over time, the gap between U.S. platforms and offshore venues may become more visible, particularly in areas such as custody, leverage and lending.
The uncertainty could also accelerate market consolidation. Larger firms with stronger legal and compliance resources may continue expanding, while smaller companies find it harder to operate across fragmented regulatory systems. That may create a smoother experience for some users, but it could also leave the market more dependent on a smaller group of major intermediaries.
The Real Test Is Platform Resilience
Mike Belshe’s warning is useful because it shifts the discussion away from political headlines and toward market design.
The most important question is not simply whether Congress passes the CLARITY Act. It is whether crypto platforms can provide clear separation between customer assets, trading operations and corporate liabilities.
A strong regulatory framework should make it easier to answer basic questions about ownership, custody, liquidity and platform responsibility. Until that framework exists, users have to perform more of that work themselves.
Tapbit readers can follow ongoing developments in U.S. crypto regulation, market structure and digital-asset trading through Tapbit. Users who want to explore available markets can create an account, while existing users can access their account.
Frequently Asked Questions
What happened to the CLARITY Act?
The U.S. Senate failed to advance the bill in a September 15 procedural vote. The motion received 49 votes in favor and 50 against, short of the 60 votes required.
Is the CLARITY Act permanently dead?
No. The bill could return during a lame-duck session after the midterm elections or be rewritten and reintroduced by a future Congress. However, its near-term path has become more difficult.
Why does Mike Belshe oppose one-stop crypto platforms?
Belshe is concerned that companies combining exchange, brokerage, custody and settlement services may create concentrated counterparty risk. One major failure could disrupt multiple services at the same time.
