Much has changed for crypto in Washington since the current Trump administration took office. The enforcement campaign against the major exchanges has wound down; rulemaking has begun to replace litigation as the instrument of policy; and Congress has at last supplied rules for stablecoins. What has not changed is that market structure remains unfinished business, so most improvements rest on the goodwill of regulators rather than on the force of law. The Senate has never come closer to finishing the job than it has this year.
Market structure is the shorthand for a market’s basic legal architecture, meaning the rules that settle which body of law governs a given instrument and who supervises the firms that trade it. Supplying one for crypto is the bulk of what the Digital Asset Market Clarity Act would do. The bill would fix what a digital asset is in the eyes of the law and whether it is subject to the jurisdiction of the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC). This matters because a security carries registration and disclosure duties that a commodity does not.
None of that is law yet, notwithstanding the Treasury secretary’s judgment in July that the bill stood at the “one-yard line.” The Senate went into its summer recess without holding a floor vote, and Majority Leader Sen. John Thune (R‑SD) has said only that the chamber will take it up on its return, which leaves a vanishingly narrow window before November’s midterms. Lawmakers have reached consensus on most of what once divided them, though several matters remain under negotiation. The objections still circulating deserve a serious answer, even if little about them is new.
Summer Mersinger, who leads the Blockchain Association and is a former CFTC commissioner, answers the most prominent of those objections in a recent op-ed for CoinDesk, and her case is consistent with what we at the Cato Institute have been arguing for years.
The first concerns the rewards that third-party platforms pay to customers who hold stablecoins. Last year’s Guiding and Establishing National Innovation for US Stablecoins Act, better known as the GENIUS Act, gave payment stablecoins their first federal framework and barred issuers from paying interest or yield on the stablecoins they issue. Some worry that what issuers may not do directly, third-party platforms might do in their place, diverting deposits from banks and eroding the funding on which their lending depends. However, as Mersinger points out, the Clarity Act sets out to forbid exactly that, banning payment for passively holding a stablecoin along with anything “economically or functionally equivalent” to the interest a bank pays while stopping short of a blanket ban on rewards.
Mersinger is right, and her argument is in fact stronger still because stablecoins backed one-for-one by cash and short-dated Treasuries involve none of the credit, liquidity, and maturity transformation that defines commercial banking. They look more like money market mutual funds than bank deposits, which means the rewards paid on them are simply price competition for customer funds. As we have written before, asking Congress to kneecap the stablecoin sector is anti-competitive and would stifle innovation in American finance.
A second objection is that the bill leaves too much room for money laundering. Again, we agree with Mersinger that it does not. Our own complaint is that the bill goes too far in pursuit of illicit finance. If anything, its surveillance provisions add to a reporting regime that has expanded needlessly since 1970 and produced 28.7 million reports against 275 investigations in fiscal year 2025.
The same objection extends to the bill’s treatment of software developers, as the Blockchain Regulatory Certainty Act would not treat the mere publication of code as money transmission. Detractors contend that this is a loophole, but it is difficult to see the merits of that argument. Someone who writes software takes custody of nothing and moves nobody’s money, so there is no one for that person to identify and nothing to safeguard.
The third objection Mersinger addresses is that tokenized securities will move to venues with little investor protection. But putting a security on a blockchain does not alter its fundamental legal character, as the SEC and CFTC confirmed in a joint interpretation issued earlier this year, and the obligations that attach to a security do not lapse just because the trading moves elsewhere.
These are the arguments that will shape debate when the Senate returns. The Clarity Act is far from perfect, and we have spotlighted areas for improvement. But it would be a shame to let perfect be the enemy of the good. Mersinger’s op-ed has correctly answered the principal objections, and further delay is unlikely to improve on what is already on the table.
