The U.S. could lose some ground to overseas crypto markets in the near term after the Senate failed to move forward with the Clarity Act, although regulatory action from the SEC and CFTC could still provide parts of the industry with a path ahead.
The Senate’s decision Tuesday left the world’s largest economy without a broad federal framework for digital assets while questions remain over how responsibilities should be divided between the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC).
The lack of clarity has already affected U.S.-focused crypto companies. Publicly traded firms including Coinbase Global and stablecoin issuer Circle Internet fell 10% following the vote, highlighting the market’s immediate response to the legislative setback.
For U.S. retail investors, the absence of comprehensive legislation means continued uncertainty over how crypto markets will be regulated. Institutional investors also face additional questions when deciding whether to deploy capital at scale. At the jurisdictional level, the setback could make it harder for the U.S. to compete with countries seeking to establish themselves as leading crypto markets.
“The practical reality is that capital and talent move toward environments where the rules are clearest,” said Lin Han, CEO and founder of crypto exchange Gate.
Han’s exchange is primarily focused on Asia and ranks fifth on CoinGecko. He said digital-asset companies operating under established licenses in overseas markets could see the biggest near-term benefit from the U.S. uncertainty.
However, Han said regulatory uncertainty in the U.S. is ultimately negative for the broader crypto industry, regardless of where individual service providers operate.
Overseas Markets Continue Building Frameworks
The Senate impasse leaves the U.S. and U.K. among the major financial centers without fully established crypto rules. The U.K.’s comprehensive framework is not expected to take effect until next year.
The European Union has moved further ahead with its Markets in Crypto-Assets (MiCA) regime, which was adopted in 2023 and became fully effective in July. Several Asian jurisdictions are also continuing to expand their regulatory frameworks for digital assets.
“The true losers are the American public and the domestic tech ecosystem,” said Stefan Muehlbauer, head of U.S. government affairs at blockchain security firm CertiK.
Muehlbauer said international crypto hubs, gray-market operators and markets in Asia and Europe could gain from the situation as they expand their share of the industry under clearer rules.
The SEC and CFTC still have authority to introduce regulations independently. The SEC demonstrated that approach Thursday by issuing its “innovation exemption” covering tokenized securities trading, creating another potential route for U.S. companies.
Muehlbauer said agency rulemaking, however, cannot serve as a complete replacement for legislation. A law establishing durable rules would be particularly important for companies planning long-term investments, launching products or calculating compliance expenses.
Not Everyone Expects Crypto Activity to Shift
Gracy Chen, CEO of crypto exchange Bitget, questioned whether the Senate vote would automatically redirect trading activity from the U.S. to Asia.
“I wouldn’t look at it as volume suddenly moving from the U.S. to Asia because of one vote,” she said. “Crypto is inherently a global market, and traders will continue to go where they can find the products, liquidity and access they need.”
Chen said the failed vote adds another layer of uncertainty around U.S. market structure and digital-asset regulation. Bitget nevertheless intends to pursue its U.S. expansion through the appropriate licensing and corporate structure, she said, regardless of whether the legislation passes.
Matt Hougan, chief investment officer at Bitwise Asset Management, described the setback as a complication rather than a fundamental change in direction.
“It would have been better if it had passed,” Hougan said. “With it failing, I think the road ahead is bumpier. But the trend is still good, and I don’t think it’s changed too much from where it was Monday, before the vote.”
Hougan noted that President Donald Trump’s pro-crypto administration still has two and a half years remaining, leaving considerable time for additional developments.
He also said the vote should not prevent investors from looking at smaller digital assets with strong token economics and ties to real-world assets.
SEC and CFTC Could Shape the Next Phase
Tom Farley, CEO of CoinDesk owner Bullish, also said the legislation’s failure does not represent an insurmountable obstacle.
“Durable legislation would give the digital asset industry greater certainty. But even with legislation, the real work of implementation happens at the agencies, and agencies can move faster,” Farley wrote on X.
He said SEC and CFTC regulations could become particularly important in the near term for tokenized securities, including the treatment of issuers, transfer agents and tokens sponsored by issuers.
Nilmini Rubin, chief policy officer at Hedera, said the Senate vote should not be viewed as the end of efforts to establish federal crypto legislation.
“We’ve seen policymakers put real time and effort into studying the underlying technology, which is a positive step in the right direction,” she said. “I think most of the industry is still as ambitious as ever that we’ll get to where we need to be.”
Rubin nevertheless warned that continued uncertainty could weaken the U.S. position in the global digital-asset market.
“The largest loser is U.S. competitiveness because uncertainty pushes innovation and adoption in the U.S. behind other countries,” she said. “The longer the market lacks clear rules, the more difficult it is to ensure the United States remains at the center of this system, rather than on the margins of it.”
She said stablecoins, tokenization and cross-border payments are likely to keep developing despite the legislative setback. However, she added that protecting U.S. consumers could become more difficult without a statutory framework.
Regulatory Progress Could Continue
Despite the Senate setback, several crypto executives continue to expect the SEC and CFTC to advance regulatory rules within their existing powers.
Those agency-level measures could provide more clarity in specific areas of the market while lawmakers continue debating broader legislation. Whether they can ultimately replace a comprehensive federal framework remains an open question.
Richard B. Levin, a U.S. lawyer and chair of FinTech and regulation at Taft Stettinius & Hollister LLP, summarized the uncertain path for U.S. crypto regulation during a panel at the 2026 European Blockchain Convention in Barcelona:
“You can count on Americans to do it absolutely wrong until they finally get it right.”
