The Digital Asset Market Clarity Act, anticipated to provide a federal framework for cryptocurrency, encountered a significant setback this week as it failed to secure the necessary support in the Senate. The bill garnered only 49 votes in favor, falling short of the 60 required to proceed, due in part to the dissent of four Republican senators. With looming midterm elections in November, the likelihood of revisiting this issue before the end of the Congressional session seems slim.
Concerns regarding ethics appear to have played a pivotal role in the bill's demise. Many lawmakers expressed that the latest revisions, introduced on Sunday, did not adequately address worries about senior officials maintaining affiliations with crypto businesses. While some Republicans claimed to have made concessions following discussions with President Donald Trump on improving ethics regulations, these changes failed to win over potential swing voters among Senate Democrats.
"This legislation failed squarely because Republicans refuse to say no to the president," commented Arizona Senator Ruben Gallego. He emphasized the need for Republicans to collaborate more closely with Democrats to create a viable bill featuring stronger ethics provisions. In contrast, Wyoming Senator Cynthia Lummis criticized her Democratic peers for allegedly undermining consumer protection, suggesting their motives were insincere.
In what appears to be a silver lining for the gaming sector, the rejection of the Clarity Act has been perceived as beneficial for gaming stakeholders battling against the rise of prediction markets, which have strong linkages to the cryptocurrency realm. The latter has established itself as a significant player in prediction market trading, especially in relation to sports, with exchanges like Crypto.com and Coinbase participating actively in the sector.
On June 16, a coalition comprising gaming lobbyists, state associations, and unions petitioned the Senate to explicitly include provisions in the bill that would prohibit sports and casino-related contracts. This collective included heavyweights like the American Gaming Association and the Indian Gaming Association, among others. Their letter to Congress urged that the ongoing expansion of gambling should not occur while waiting for legislation surrounding crypto to be clarified, reinforcing the idea that sports betting should not fall under the jurisdiction of the CFTC and should not be available via prediction market platforms.
Following the Senate's decision, David Bean, Chairman of the IGA, expressed his approval, remarking that the Senate acted appropriately by not advancing the bill. He acknowledged that the Clarity Act might have extended the CFTC's authority without clear safeguards. However, he also warned that the battle is not over yet.
The bill's collapse is a significant blow to both operators engaged in crypto-related prediction markets and the Commodity Futures Trading Commission (CFTC), led by Chairman Michael Selig, who has championed the establishment of a federal framework for digital assets. Various interest groups and political committees had mobilized considerable resources, investing time and money into lobbying for the legislation.
Since his appointment, Selig has been a vocal advocate for a comprehensive approach to cryptocurrency regulation. As previously noted by Bean, the Clarity Act was poised to assign new responsibilities and powers to the CFTC concerning the burgeoning realm of digital assets. There currently exists uncertainty as the CFTC operates with only Selig as its commissioner, as no other appointments have been nominated.
Selig recently convened a meeting of the CFTC’s Innovation Advisory Committee, discussing cryptocurrency developments with industry leaders. However, without a regulatory framework, any directives or advisories from the CFTC or the Securities and Exchange Commission are now vulnerable to challenge.
Beyond the political ramifications, the lack of federal crypto regulation may adversely affect the regulated iGaming and sports betting sectors. A growing cohort of younger customers is well-versed in cryptocurrency, making the absence of regulatory endorsement problematic, as it may incentivize them to turn to unregulated offshore platforms that do accept crypto. This concern was echoed by sports betting executives at the ICE Barcelona conference in 2025, who voiced their frustrations about being barred from leveraging cryptocurrency while their unlicensed rivals freely embraced it.
A report from payment provider Paysafe indicated that 64% of online sports bettors engage with crypto, significantly above the national average of 30%. At present, crypto deposits are permitted only in Wyoming and Colorado, with no state allowing crypto withdrawals. Survey findings revealed that 85% of participants would welcome withdrawals as a possibility. Should regulations allow, crypto is projected to emerge as a leading payment option for deposits in the gaming industry.
