CLARITY Act News: What Happens If The Bill Doesn’t Pass?

With the Senate vote just days away, Digital Chamber CEO Cody Carbone laid out what happens next if the CLARITY Act fails to pass, and he isn’t sugarcoating the odds of a quick fix.

Don’t Expect a Lame-Duck Save

Asked whether the bill could still get done in a lame-duck session or early next Congress, Carbone said, “I think that is unlikely,” he said. If the bill can’t move forward in the coming weeks before the election, he expects a very different path to take shape.

Regulators Move Fast

Carbone said the most immediate response would come from regulators themselves. “You’re going to see the regulators moving fast and furious,” he said, pointing to SEC Chairman Paul Atkins, who is already signaling they’ll implement CLARITY’s goals through guidance and rulemaking rather than waiting on Congress. He expects that to start with an innovation exemption from the SEC, arriving quickly if the bill stalls.

A “Skinny” Version Could Emerge

The second path Carbone outlined involves breaking the bill apart. He reminded that CLARITY isn’t one clean piece of legislation, it’s an amalgamation of roughly 40 to 50 separate bills merged into one package. That structure, he said, opens the door to pulling out individual pieces and attaching them to must-pass legislation later this year, citing the National Defense Authorization Act, which has passed every year for six decades, as a likely vehicle.

Carbone was cautious about the odds of that approach working. “I don’t know if the latter will be successful,” he said, but he was confident regulators stepping in independently is the more likely outcome. “That will be the regulatory framework implementation for the next two years. It’ll likely be primarily agency action.”

If CLARITY fails to clear its September 15 hurdle, Carbone’s read is that Washington doesn’t get a clean do-over anytime soon. Instead, expect regulators to fill the gap through rulemaking, with a slim chance that individual provisions get revived by riding along on unrelated must-pass bills before year’s end.