US Senate Pushes Legislation to Keep SEC Out of Crypto With Potential Market Shift

The U.S. Senate is preparing to debate a major piece of legislation, the CLARITY Act, which seeks to define the regulatory framework for digital assets in the United States. The bill, which aims to clarify whether digital tokens fall under the jurisdiction of the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC), is expected to be marked up in the Senate Banking Committee on January 15, 2026.

The bill's supporters argue that it will end the regulatory ambiguity that has long plagued the crypto market. By establishing a clear jurisdictional divide between the SEC and CFTC, the CLARITY Act would provide a legal blueprint for crypto companies and exchanges. The move comes after years of uncertainty that left the industry vulnerable to enforcement actions without clear rules according to analysis.

The Senate Banking Committee has already seen progress in negotiations, with both Democratic and Republican staff indicating that compromise language has narrowed key differences since December. However, the bill still faces the challenge of securing 60 votes on the Senate floor, a requirement for passing most legislation. This makes bipartisan support critical for the bill's success.

Why Did This Happen?

The CLARITY Act reflects a broader shift in U.S. crypto policy. In mid-2025, the House passed the Digital Asset Market Clarity Act, which laid the groundwork for a federal approach to crypto regulation according to analysis. Following the resignation of former SEC Chair Gary Gensler in early 2025, new leadership at the SEC, including Acting Chair Mark Uyeda and new Chair Paul Atkins, pushed for a rules-based regulatory approach according to analysis. This shift helped reduce uncertainty and spurred growth in ETFs and digital asset markets.

Meanwhile, President Donald Trump issued Executive Order 14178, which established a federal "Crypto Czar" to coordinate U.S. crypto policy across agencies. This step underscored the administration's commitment to a unified approach. The combined actions of the executive and legislative branches have brought the industry closer to a comprehensive regulatory framework.

How Did Markets Respond?

The market's reaction to the CLARITY Act has been muted so far. On December 30, 2025, Bitwise filed for 11 new crypto ETFs, including altcoin products tied to Aave, Uniswap, and Zcash. However, crypto prices and flows barely reacted to the news according to analysis. The market appears to have moved beyond the excitement of ETF filings and is now more focused on macroeconomic factors and liquidity according to analysis.

This muted response suggests that the market has priced in much of the potential regulatory clarity that the CLARITY Act promises. According to analysts, the industry is in a "boring phase" where ETF filings no longer serve as major market-moving events according to analysis. The focus has shifted to distribution channels, fee structures, and the readiness of major platforms like Vanguard and Schwab to carry crypto ETFs according to analysis.

What Are Analysts Watching Next?

Analysts are closely watching the implementation of the GENIUS Act, which was passed in mid-2025 and aims to establish a federal framework for stablecoins. The U.S. Treasury has requested public feedback on proposed rules, and analysts expect formal regulations to be announced in early 2026. The Federal Deposit Insurance Corporation (FDIC) has also outlined conditions for bank subsidiaries to issue stablecoins, signaling coordination across federal regulators.

Another key development is the SEC's planned introduction of an "innovation exemption" in January 2026. This initiative would allow crypto startups to test new products under reduced regulatory requirements for a limited period according to analysis. The exemption is expected to foster innovation while maintaining oversight, particularly for smaller firms that have been hesitant to launch new products due to regulatory uncertainty.

At the state level, new laws are also shaping the crypto landscape. California will implement a new Digital Financial Assets law on July 1, requiring firms to obtain licenses to serve residents. Texas has also taken steps to establish a state-managed Bitcoin reserve fund according to analysis. These developments highlight the growing importance of state-level regulation in shaping the crypto market.

The regulatory environment is also being shaped by global developments. The GENIUS Act has set a global standard for stablecoins, with the UK, Singapore, and the EU's MiCA framework driving adoption of compliant tokens according to analysis. By the end of 2025, stablecoins had topped $250 billion in market cap and accounted for over 30% of on-chain transactions.

Despite the progress, challenges remain. The final wording of the CLARITY Act will be critical, as subtle language choices can have profound implications for the industry according to analysis. Vigilance and continued engagement from the crypto community will be essential to ensure that the bill, if passed, truly serves its intended purpose of fostering a robust and fair digital asset market according to analysis.

The January 15 markup represents a critical test for the CLARITY Act. A successful outcome would push U.S. crypto regulation closer to reality. A failure, however, would underscore the difficulty of achieving consensus on a complex and rapidly evolving industry according to analysis.

As the U.S. moves forward with its regulatory agenda, the market remains focused on macroeconomic factors and institutional adoption. While the CLARITY Act may not move prices in the short term, its long-term impact on the regulatory landscape could be significant.