Advocacy group Coin Center highlights risks of rejecting crypto legislation, citing possible increased prosecutions and regulatory shifts without the CLARITY Act.
The CLARITY Act, a proposed crypto market structure bill, has stalled in the U.S. Senate after banks, crypto firms, and lawmakers failed to agree on key provisions, such as allowing stablecoin yields, according to CoinTelegraph.
Peter Van Valkenburgh, executive director of advocacy group Coin Center, stated that without passing the CLARITY Act, future U.S. governments could crack down on the crypto industry through prosecutorial discretion rather than clear rules.
Reasons for the Stalemate
The bill aimed to establish frameworks for registering crypto intermediaries, regulating digital assets, and classifying tokens, but disagreements halted its progress in the Senate.
Van Valkenburgh emphasized that rejecting developer protections in the CLARITY Act and similar legislation, like the Blockchain Regulatory Certainty Act, prioritizes short-term interests over long-term industry stability.
During the previous U.S. administration, former SEC Chair Gary Gensler faced criticism from the crypto sector for using enforcement actions instead of formal rulemaking, as noted in the article.
Without legislative clarity, Van Valkenburgh warned that a future administration might increase prosecutions of privacy-tool developers as unlicensed money transmitters and revoke existing regulatory guidance.
Since Gensler's resignation, the SEC has shifted to a more favorable stance toward crypto, including dismissing some enforcement actions, but Van Valkenburgh cautioned that this could change without binding legislation.
He added that failing to secure statutory protections now would mean the industry helps create conditions for future restrictions, undermining the principles of transparency and openness in crypto.
