The crypto industry notched a big win last year with Congress passing the GENIUS stablecoin Act. Now, it’s going for checkmate.
As time ticks by, the industry is closer than ever to finally getting the rules it’s been asking for, but the biggest risk may be that it all falls apart at the finish line.
Kristin Smith, president of the Solana Policy Institute, has been working on crypto policy in Washington since the early days, back when only a handful of people were even thinking about how blockchains fit into U.S. law. Today, she finds herself in the middle of what could be the industry’s most consequential legislative push yet: the so-called CLARITY Act.
“This is really, really hard and this is not a guarantee,” Smith told Coinage in a new interview. “There are a lot of people working very hard right now… but we are not out of the woods yet.”
For an industry that has spent the better part of a decade fighting for legitimacy, the moment is both long-awaited and precarious. The CLARITY Act, designed in-part to finally draw clear lines between what counts as a security versus a commodity in crypto markets, represents the closest Washington has come to a workable framework. But getting it across the finish line is proving just as complex as the years-long effort to build it.
Nonetheless, crypto proponents still remain hopeful. SEC Commissioner Hester Peirce, affectionately dubbed “crypto mom” for her support of the industry, also tells Coinage she’s optimistic a deal gets done in the next few weeks.
Smith describes policy-making like a product cycle. One that, in crypto’s case, has taken nearly a decade to develop. Ideas are debated, refined, and reworked until political conditions align. Parts of Commissioner’s original token “safe harbor” have been implemented and added to.
“It’s somewhere between a seven and ten year process for all of this to happen,” she said. That process has included everything from early education efforts on Capitol Hill to surviving what many in the industry saw as an outright regulatory crackdown under the prior leadership at the Securities and Exchange Commission.
Under former SEC Chair, Gary Gensler, the agency filed more than 100 enforcement actions against crypto firms, advancing a sweeping view that most digital assets qualified as securities. The result, Smith argues, was a chilling effect that pushed innovation overseas and reshaped the types of products being built.
“The technology adapted to the regulatory environment,” she said. “If you were making something useful, then you were going to be regulated like a security.”
In that vacuum, less-regulated corners of the market thrived. Memecoins, with their minimal claims to utility, exploded in popularity — something Smith sees not as an accident, but as a direct consequence of policy signals.
Now, the pendulum has swung in the opposite direction. A more crypto-friendly regulatory environment, combined with growing bipartisan support in Congress, has created a rare window to lock in durable rules. But that window is narrow — and closing fast.
The challenge lies in the mechanics of Washington itself. While the House already moved legislation forward last year, progress has stalled in the Senate. Unlike the House’s top-down structure, the Senate operates on more collaborative consensus (and sometimes obstruction.)
“A single senator can hold up anything,” Smith said, noting the complicated negotiations to get the bill advanced to the markup stage in the Senate Banking Committee.
That dynamic is playing out in real time. Negotiations have slowed over key issues like whether companies can offer yield or rewards on stablecoins. Senator Thom Tillis, a pivotal Republican voice on the committee, has yet to fully back the bill, citing the need for further consultation with banking stakeholders. Until that support materializes, the legislation remains stuck.
And even if it clears committee, the hurdles don’t end there. The bill will need 60 votes to overcome a filibuster, meaning bipartisan support is not optional. That requirement may force further compromises across issues ranging from DeFi regulation to disclosure standards, with multiple negotiations happening simultaneously behind closed doors. Time, meanwhile, is the scarcest resource.
“Floor time is like Bitcoin,” Smith said. “It’s limited.”
If the bill doesn’t advance soon, the calendar becomes the enemy. Congress is typically in recess in August. September is consumed by budget negotiations. And in an election year, October is effectively lost to campaigning. That leaves a shrinking window — potentially just a few months — to move the legislation through.
Smith estimates the Senate likely needs to move the bill out of committee by the end of May to have a realistic shot. But despite the uncertainty, she remains cautiously optimistic as well. Years of groundwork have led to this point, and the current proposal, in her view, is the most complete version yet.
“This is the closest I have ever seen to a good product,” she said.
Even so, the stakes extend beyond just one bill. Without legislation, much of crypto’s regulatory future would remain in the hands of agencies like the SEC and the Commodity Futures Trading Commission, where rules can shift with new leadership. That kind of instability is exactly what the industry is trying to avoid after years of whiplash.
“The pendulum swinging back is a real concern,” Smith said. “Anything we can do to get policy as solid as possible, we want to do.”
That’s ultimately what makes the CLARITY Act so consequential. It’s not just about codifying crypto, it’s about locking in those definitions in a way that can’t easily be undone.
Bettors on Polymarket are placing about a 40% chance on the CLARITY Act passing this year.
Coinage is a community-owned DAO letting our NFT holders become actual co-owners in one of the fastest-growing Web3 media outlets. Mint an NFT and become a member today to open a path to patronage dividends, or stake with us to support our project.
