Congress Faces Crucial Decision on the Clarity Act for Crypto Regulation

Washington DC, United States Jul 16, 2026 ALN: Spending more than two decades in Congress, I saw firsthand how legislative momentum can propel our country forward — and how legislative inertia can leave us scrambling to catch up. Today, Congress stands at a crossroads: the United States can remain the world’s technological and financial capital or give it all away, potentially to adversaries who are mounting an active challenge to U.S dominance.

The crypto market structure legislation currently moving through Congress, the Clarity Act, is unlike anything we’ve seen since the Telecommunications Act of 1996: a large-scale, forward-looking effort to embrace technological change and introduce consumer safeguards for a nascent technology. Like that earlier landmark law, this effort enjoys broad bipartisan support and requires coordination across multiple committees. And that only happens when Congress recognizes the high stakes.

For too long, American financial policy has been in a reactive crouch. Since the 2008 financial crisis, virtually every major piece of legislation – from Dodd-Frank to subsequent banking reforms – has been backward-looking, designed to address past crises rather than prepare for the next frontier. While these measures serve important purposes, they’ve left us with a regulatory framework built for yesterday’s risks, not tomorrow’s opportunities.

The emergence of cryptocurrencies and blockchain technology has created a new frontier in financial markets. Cryptocurrencies, which use decentralized networks to enable peer-to-peer transactions, have gained significant traction among investors and consumers alike. However, the lack of a clear regulatory framework has created uncertainty for businesses operating in this space. This uncertainty can stifle innovation, as entrepreneurs are often hesitant to invest time and resources into projects that may be deemed illegal or subject to sudden regulatory changes.

Crypto market structure legislation can break this pattern. For the first time since the Gramm-Leach-Bliley Act of nearly three decades ago, we have the chance to enact comprehensive financial policy measures that aren’t precipitated by crisis. The Clarity Act aims to provide clear definitions and guidelines for how cryptocurrencies and blockchain technologies will be treated under U.S. law. Such clarity is essential for fostering an environment where innovation can thrive while ensuring that consumer protection and market integrity are upheld.

Some argue that nearly centuries-old securities laws already cover what crypto needs, or even claim that the industry would prefer to have no regulation at all. As someone who has spent his career cutting red tape and championing the free market, I can understand where those arguments come from. In this case, though, they are simply wrong. The unique characteristics of cryptocurrencies and their underlying technologies necessitate a tailored regulatory approach that addresses their specific risks and opportunities.

Those who claim the legal status quo for crypto is just fine have not listened to what businesses large and small are actually saying. They are asking for rules to operate. When entrepreneurs know boundaries, they build confidently within them. The internet and the thousands of startups that made America the world’s tech leader flourished not despite regulation, but because smart regulation created the infrastructure and protections users and investors required. The Clarity Act seeks to establish such an infrastructure for the crypto industry, providing a framework that encourages innovation while safeguarding the interests of consumers and investors.

Over time, decentralized innovations can also prove their worth within a regulatory framework. But first, we need the framework itself. The proposed legislation is designed to create a balanced approach that allows for the growth of the crypto market while ensuring that bad actors are kept at bay. By establishing a clear set of rules, the Clarity Act aims to empower legitimate businesses to thrive and contribute to the economy without the constant threat of regulatory backlash.

The framework in the Clarity Act can ensure entrepreneurs feel confident in creating jobs and building businesses without fear of arbitrary or unexplained crackdowns. Upon becoming law, it will establish protections for consumers and investors, and give law enforcement agencies the tools they need to identify and stop criminals and bad actors seeking to hurt the American people. This proactive approach is crucial in an era where cybercrime and financial fraud are increasingly sophisticated and prevalent. I’m proud of many bills passed during my tenure in Congress, including as chair of the House Committee on Financial Services, that made important strides forward, but this effort dwarfs them in scope and significance.

This legislation is governance at its best: Congress identifying an emerging sector with enormous potential, and responding with the regulatory clarity needed for that sector to flourish within appropriate guardrails. While there is disagreement on precise details, almost everyone – from entrepreneurs and investors to academics and policymakers – agrees that this regulatory clarity is crucial for blockchain technologies and the innovation and economic growth they enable to thrive. The Clarity Act represents a significant step toward ensuring that the U.S. remains at the forefront of technological advancements in finance.

What gives me confidence that we are closer than ever to a breakthrough is the remarkably broad support this has garnered in Congress. The GENIUS Act, which regulates stablecoins, passed both chambers of Congress with strong bipartisan backing. And various crypto market structure bills have attracted sponsors across parties and ideological spectrums. Members understand digital assets aren’t disappearing and recognize it’s time to act. The bipartisan nature of this support underscores the recognition that the future of finance is evolving, and the U.S. must adapt to maintain its competitive edge.

Other countries are moving aggressively, and global capital and innovation will flow to markets with clear rules. Countries such as Singapore, Switzerland, and the United Kingdom have established regulatory frameworks that promote innovation while ensuring consumer protection. The Clarity Act is our best chance to maintain America’s role as home for global capital markets deployed in the world’s safest, most resilient regulatory environment, with rule of law and property rights clearly defined. This is about digital assets, but it’s also about deciding if America will lead the 21st-century economy and set the pace for the world or only react to crises. The stakes are high, and the time for action is now.

I hope that decision is obvious. The Clarity Act represents an opportunity for Congress to take a proactive stance on an emerging technology that has the potential to reshape the financial landscape. By embracing innovation and providing a clear regulatory framework, we can foster an environment where entrepreneurs can thrive, consumers are protected, and the U.S. remains a leader in the global economy.

Patrick McHenry served as a U.S. Representative from North Carolina and was Chairman of the House Financial Services Committee.