a16z Crypto General Partner: Now Is the Best Time to Advance the Clarity Act

The U.S. Senate is preparing to address the CLARITY Act, a legislative effort to provide regulatory clarity for the digital asset market. Originally scheduled for markup earlier in January, the bill has been pushed to the end of the month as lawmakers work to finalize its language. The bill aims to establish a clear federal framework for crypto exchanges, custodians, and brokers while addressing issues like stablecoin reserves and market manipulation according to reports.

Senator Cynthia Lummis, a key pro-crypto advocate, has introduced the Blockchain Regulatory Certainty Act to protect developers from being classified under money transmitter laws. She has worked with Senator Ron Wyden to push for legislation that avoids imposing rules meant for financial intermediaries on code writers. This effort has gained bipartisan support, with critics arguing that such enforcement would stifle innovation and violate free speech rights.

Meanwhile, Patrick Witt, president's council of advisers for digital assets, has urged the crypto community to remain patient. He emphasized that the Clarity Act is nearing finalization and warned against panic in the face of delays. This sentiment is echoed by industry leaders like Charles Hoskinson, who believes the passage of the bill could trigger a crypto bull market in 2026.

Why Did This Happen?

The CLARITY Act has faced multiple delays due to political and regulatory challenges. Some Democrats worry it weakens investor protections, while Republicans have concerns over stablecoin yields and decentralized finance according to analysis. These competing priorities have made it difficult to secure a unified vote. To avoid a failed floor vote, Senate leaders have moved the Agriculture Committee markup to late January to allow for last-minute negotiations.

The bill is expected to redefine how digital assets are treated, placing some tokens under the SEC's securities framework and others under the CFTC's commodities regime as reported. This shift is intended to replace the current enforcement-driven approach with clear statutory rules, providing a predictable compliance environment for firms and institutions according to industry analysis.

How Did Markets Respond?

Market participants remain watchful as the bill's timeline tightens. JPMorgan analysts have highlighted that institutional flows into crypto markets reached a record $130 billion in 2025 and expect them to grow further in 2026. They argue that the Clarity Act could encourage more institutional adoption and activity in areas like stablecoin issuance and crypto custody as analysts note.

The XRP price has also reflected this cautious optimism. As of January 12, it hovered between $2.03 and $2.10, with traders waiting for the Senate's vote on January 15. Analysts suggest that a successful passage of the Clarity Act could reduce compliance uncertainty and attract more institutional investors.

What Are Analysts Watching Next?

The Senate Banking Committee was scheduled for a markup on January 15 but pulled the session after Coinbase's last-minute decision to withdraw support. This move has raised concerns in the industry about the bill's future. While some lawmakers and executives, including Ripple's Brad Garlinghouse and a16z's Chris Dixon, argue the bill is still alive, others question whether the delays will push the vote beyond the 2026 election cycle according to reports.

The CFTC has also taken steps to prepare for the evolving landscape, forming an innovation committee to help shape rules for digital assets and AI. This move underscores the growing recognition of crypto as a key component of the financial ecosystem as noted.

With the Senate committees coordinating their timelines, the CLARITY Act's final form could reshape U.S. digital asset regulation. A successful passage would provide much-needed clarity for market participants and signal a shift toward a more structured and regulated crypto environment according to analysis.