Novogratz Warns Crypto Regulation Could Be Delayed for Years as CLARITY Act Stalls

Galaxy CEO Mike Novogratz has warned that the United States could be left without comprehensive cryptocurrency regulation for years after the Senate failed to advance the proposed CLARITY Act.

Novogratz issued the warning ahead of Tuesday’s crucial Senate vote, saying that if the legislation failed to move forward, the United States might not get meaningful crypto regulation “for a long, long time — if ever.”

His prediction has gained fresh significance after the Senate voted 49-50 against advancing the legislation, falling short of the 60 votes required to overcome the procedural hurdle.

The CLARITY Act is designed to establish the first comprehensive federal regulatory framework for the U.S. digital-asset industry. Among other provisions, the legislation would clarify the respective roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in overseeing different parts of the cryptocurrency market.

The bill has been under negotiation for more than a year and has attracted strong backing from major players in the crypto industry, who argue that clearer rules would provide businesses and investors with greater certainty.

The Senate’s latest impasse was largely driven by disagreements over ethics provisions involving President Donald Trump’s cryptocurrency interests.

Democrats argued that the proposed restrictions did not go far enough to prevent federal officials, particularly the president and his family, from benefiting from crypto-related holdings and businesses while in office.

Republicans made several changes to the bill in an effort to win Democratic support, including giving state attorneys general greater powers to enforce certain ethics provisions. However, Democrats continued to demand stronger requirements, including more stringent divestment rules.

The disagreement ultimately prevented the legislation from securing the votes needed to proceed. The failure does not necessarily mean the CLARITY Act is permanently dead, but its prospects have become considerably more uncertain.

With the November midterm elections approaching and Congress facing a shrinking legislative calendar, there is limited time to revive the bill and complete the remaining stages of the legislative process.

Meanwhile, the SEC and CFTC can continue developing regulatory rules under existing authority, but industry leaders argue that agency rules alone cannot provide the long-term certainty that legislation would bring.

Novogratz previously warned that a failure to pass the legislation would be “terrible for the USA” and could push more cryptocurrency businesses and investment activity offshore. He argued that the digital-asset industry will continue developing regardless of U.S. legislation, but prolonged regulatory uncertainty could weaken America’s position in the global crypto economy.

The Senate setback represents a major blow to an industry that has spent heavily lobbying for clearer rules in Washington. It also leaves cryptocurrency companies facing many of the regulatory questions that have persisted for years, including which federal agency has authority over particular digital assets and how crypto platforms should be regulated.